Crypto losses deepen as inflation clouds Fed outlook

Bitcoin continued to slide on Monday as investors reacted to last week’s hotter-than-expected inflation data, fueling yet more risk-asset selling.

The cryptocurrency fell as low as $114,700, nearly 8% down from record highs set on Wednesday. By 9 a.m. ET it was about 1.5% down for the day, at $115,600.

Bitcoin began its slump last week after the latest U.S. Producer Price Index — the main gauge of wholesale inflation — showed a 0.9% rise from June, triple the pace economists expected.

The digital asset had been sitting at an all-time high, at one point rising above $125,000, spurred in part by cooler-than-expected consumer inflation data previously. But the surprisingly high reading for wholesale inflation sparked concerns that it could yet dampen the Federal Reserve’s appetite to cut interest rates at its next meeting in September.

High rates usually mean a stronger dollar and more attractive bond yields, which pulls money away from riskier assets like Bitcoin.

It dragged on other major cryptocurrencies too, with Ether sliding more than 8% over the last week to $4,337. The combined value of all digital assets had fallen below the benchmark $4 trillion on Monday, according to CoinMarketCap.

Bitcoin’s previous highs were also partly a result of a fresh buying spree from companies this year looking to amass stockpiles of the cryptocurrency. Leading them was Michael Saylor’s Strategy, having accumulated as much as $72 billion worth of Bitcoin.

But Treasury Secretary Scott Bessent said last week that the U.S. would not be joining the likes of Saylor. Bessent said in an interview on Mornings with Maria on Fox Business that the government would not buy more of the cryptocurrency for its proposed strategic reserve, dashing the hopes of some investors.

“We’ve also started to get into the 21st century, a Bitcoin reserve. We’re not going to be buying that, but we are going to use confiscated assets and continue to build that up,” he said.

Crypto investors will be paying close attention to the Fed’s annual economic symposium in Jackson Hole, Wyoming this week for hints about the direction of September’s policy meeting, while on Thursday fresh U.S. jobless claims data — a weekly gauge of unemployment — will provide another key signal on the economy’s strength.

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