Bitcoin, the largest digital asset by market cap, experienced a decline in value on Tuesday. This drop occurred as the US wholesale inflation rate surpassed economists' expectations in April. The Producer Price Index (PPI) rose by 0.5%, exceeding the predicted 0.3% increase. As a result, Bitcoin's value fell below $62,000, decreasing by 1.6% within 24 hours to trade at $61,731.

Traders are closely monitoring inflation readings this week, including Tuesday's PPI and Wednesday's Consumer Price Index (CPI). These indicators will provide insight into potential changes in interest rates. According to Wintermute analysts, the US Federal Reserve requires three consecutive softer inflation readings to initiate monetary easing.

The recent higher-than-expected wholesale inflation data may lead to increased pressure on the US central bank to maintain higher interest rates for an extended period. This scenario could discourage investments in risk assets like Bitcoin.

Following the PPI print, the CME's FedWatch tool predicts a 29.2% chance of a rate cut at the July Federal Open Market Committee (FOMC) meeting and a 48.9% chance at the September meeting. Interest traders anticipate a 91.3% likelihood that rates will remain unchanged at the June meeting. Wintermute OTC Trading Desk analysts expect a market response to any unexpected inflation readings this week. They also highlight the importance of Powell's upcoming speech for additional policy insights.