During his recent speech, U.S. Federal Reserve Chair Jerome Powell expressed a slightly hawkish stance on monetary policy and interest rates, despite facing inflationary pressures and a robust labor market. Powell remains optimistic about achieving the 2% inflation target, even amidst concerns over elevated PPI inflation levels, which have led to a decline in Bitcoin prices due to panic selling.

Powell highlighted the resilience of the U.S. economy, particularly in the face of a strong labor market. However, he acknowledged worries about recent spikes in inflation, hinting at a potential shift in the Fed's stance on rate cuts due to the hotter inflation trends observed in recent months.

Hot PPI Inflation Data Release

The latest PPI inflation data for April, released by the U.S. Bureau of Labor Statistics, exceeded expectations, with a 0.5% increase compared to the anticipated 0.3%. The core PPI also surged by 0.5%, surpassing forecasts of 0.2%. While the annual PPI remained steady at 2.2%, the annual core PPI rate rose to 2.4% from a revised 2.1%.

Powell reiterated the Fed's commitment to closely monitor economic indicators and combat inflation to achieve the 2% target, ruling out immediate rate hikes. Despite some Fed officials advocating for rate cuts, Powell's cautious tone reflects a more measured approach to monetary policy adjustments.

Market Reactions and Bitcoin Price Movement

Both the crypto and stock markets are experiencing pressure as investors await the release of key CPI inflation data later in the week. Market participants anticipate a slight decrease in annual CPI inflation from 3.5% to 3.4%.

Amidst this uncertainty, the U.S. stock market opened flat as investors digest the latest PPI data and await the CPI figures for further market direction. The CME FedWatch Tool indicates a 49% likelihood of 25 bps rate cuts commencing in September, with additional cuts anticipated in November and December.

Following the release of new inflation data, the U.S. dollar index (DXY) dropped to 105, while the U.S. 10-year Treasury yield decreased by 4.471%. This movement, coupled with market dynamics, led to a decline in Bitcoin prices to $60k, triggering a sell-off across the cryptocurrency market.

Bitcoin Price and Altcoin Performance

Bitcoin's price experienced a 3% decline, currently hovering around $61,200, with a daily low and high of $61,156 and $63,422, respectively. Despite this dip, trading volume surged by 11% over the past 24 hours, indicating heightened trader interest.

Altcoins such as Ethereum, BNB, Solana, and Toncoin also faced losses ranging from 2% to 8% within the same timeframe, influenced by the PPI inflation data and Powell's speech, reflecting the broader market sentiment and reactions to economic indicators.