Bitcoin, Ethereum Slip on Inflation Surprise as Oil Prices Jump

The price of Bitcoin slipped on Wednesday alongside U.S. stock indexes as investors grappled with a hotter-than-expected inflation and President Donald Trump’s sharpened stance on Iran.

The Producer Price Index (PPI), which tracks changes in wholesale prices, rose 3.4% in the 12 months through February, the Bureau of Labor Statistics said. Economists expected the index to show a 2.9% annual increase, according to Trading Economics.

The price of Bitcoin recently changed hands around $71,135, a 5% decrease over the past day, CoinGecko data showed. Ethereum and Solana fell 7% to $2,185 and 6% to $89, respectively, over the same period of time.

Although the data-collection period for Wednesday’s PPI reading barely overlapped with the initial moments of the U.S.-Israel war with Iran, which broke out on Feb. 28, the rise in prices for producers is likely to bolster inflation concerns that stem from elevated energy prices, according to Carlos Guzman, a research analyst at crypto trading firm GSR.

The Federal Reserve’s framework for monetary policy typically “looks through” temporary energy shocks. However, Guzman told Decrypt that the central bank may be forced to keep interest rates higher for longer if energy costs remain elevated for a prolonged period of time.

“That could overall be bad for crypto,” he said, given that lower interest rates generally incentivize investors to shift capital toward riskier assets. “I think the past few weeks since the war started have been pretty surprising, because we’ve seen crypto perform well.”

On Wednesday, the S&P 500 fell 0.4%, outpacing the tech-heavy Nasdaq’s 0.3% decline, while the Dow Jones Industrial Average tumbled by 300 points. 

Meanwhile, Brent crude futures jumped over 5% to $109 following reports of attacks on Iran’s South Pars gas field, the world’s largest, which is shared by Iran and Qatar. 

On Truth Social, Trump openly wondered what would happen if the U.S. “‘finished off’ what’s left of the Iranian Terror State,” while urging allies to assist the U.S. in escorting ships through the Strait of Hormuz, a critical waterway through which 20% of the world’s oil supplies flow.

In a separate post on his social media platform, Trump questioned when Fed Chair Jerome Powell would lower interest rates, flicking at a monthslong pressure campaign. His renewed focus came as Powell prepared for his penultimate policy announcement as Fed chair.

The Fed is widely expected to hold its benchmark interest rate at a target range of 3.5% to 3.75%, per CME FedWatch. Meanwhile, traders grew increasingly confident that the Fed would leave interest rates unchanged throughout the remainder of the year.