What Was Expected, What Happened?

Everyone expected this: Producer prices would increase by 0.5% - 0.6% monthly, reaching 5.3% annually. In other words, we would say that inflation was gradually coming under control.
The data that came in was a shock:
A 1.3% monthly increase. Almost three times the expectation. The biggest jump since 2022.
A 6.3% annual increase. The expectation was 5.3%. It was 5.6% in August, so there's an increase, not a decrease.
Even core data, which is the data excluding food and energy, increased by 0.5% monthly. So inflation isn't just due to oil; it's spread everywhere.
At the same time, retail sales came in at 0.8%, compared to an expectation of 0.4%. So the economy isn't weak; it's strong and inflationary. This is the worst-case scenario for the Fed.
So Why Did This Inflation Explode?
There are three clear reasons:
1. Energy Shock: On the producer side, the energy item jumped by 10.8% in a single month. Due to tensions with Iran and the Strait of Hormuz risk, oil and natural gas prices have skyrocketed. Producers are producing at a higher cost.
2. Sticky Services Inflation: Not only goods, but also services have increased by 0.8%. This includes items like hospitals and financial services. These directly contribute to the PCE inflation that the Fed monitors. Therefore, this data signals that the next PCE will also be high.
3. Costs are Passing On: Producers are now saying "I can't cover this cost" and passing the price increase on to the next link in the chain. In other words, the pipeline is completely open; price increases will go to the consumer.
In short, inflationary pressure on the production side is both strong and persistent.
The Main Point: How Will This Affect the Crypto Market?
Listen carefully here, because many people misunderstand this.
Short Term - First 24-48 Hours: Decline and Liquidation
This data is initially negative for $BTC and $ETH . Why?
The probability of the Fed raising interest rates in October jumped from 20% to 60%. An interest rate hike means a stronger dollar and decreased liquidity. When liquidity decreases, the first thing to sell is risky assets, i.e., crypto.
Therefore, it's very normal to see sudden spikes in $BTC after the data release, drops below $70K, and long liquidations in the futures market. Altcoins fall twice as much as $BTC, this is classic. If you are in leveraged trading, the probability of being stopped out after this data release is very high. That's why I closed my leverage before the data release.
Medium Term - 1-2 Weeks: The Market Will Price in the Fed
The market will now ask: Will the Fed really raise interest rates in October? Bond yields will rise, and the $DXY, the dollar index, will strengthen. In this environment, $BTC will remain horizontal and volatile in the 68K-72K band. There is no fuel for a new all-time high. During this period, $USDT dominance will rise, meaning people will flee to cash. The best strategy isn't to try to buy and sell during this volatility, but to wait on the sidelines and anticipate the real opportunity.
Long Term - The Real Story Begins Here: The Hidden Bull Scenario for $BTC
Everyone is focusing on the short term while missing the long term.
This PPI data shows us that inflation is returning due to geopolitical reasons, and even if the Fed raises interest rates, it won't be easy to bring this inflation down. So, we're facing a "stagflation"-like scenario: the economy looks strong, but inflation is high.
What happens if the Fed continues to raise interest rates? US debt interest rates will rise further, making debt unsustainable. Eventually, the Fed will be forced to return to printing money.
This is the real thesis for $BTC. In the short term, $BTC falls because of rising interest rates, but in the long term, it will become the asset that gains the most value with the narrative of "reputable money is losing value, inflation is permanent." Just like $BTC, which fell when interest rates rose in 2022 but then increased tenfold in 2023-2025 as an asset safe from inflation.
The situation is a bit more difficult for $ETH. Risky technology assets are suppressed when interest rates are high. $ETH may remain weaker than $BTC.
To be clear about altcoins: A real altcoin season won't come until the interest rate hike cycle is over. This data has delayed the altcoin season by at least 2-3 months.
What am I doing?
1. I'm not trying to buy at the bottom due to FOMO in the short term. There's a lot of liquidation in this volatility. 2. For $BTC, I'm watching the 67K - 68.5K range as a gradual spot buying zone. 3. I'm not taking more than 3% risk in futures. This week, the market will be very volatile until the $ASML and $TSMC earnings reports and the next $CPI data are released.
Summary: Did the September PPI exceed expectations? Yes, by a large margin. Was manufacturing inflation strong? Yes, very strong, especially due to energy and services. What will the market reaction be? In the short term, a correction and fear for crypto; in the long term, a renewed strengthening of the $BTC hedging story against inflation.
Did you switch to cash after this data release, or are you accumulating $BTC?
#每周来晒 #USSeptemberPPIDataRelease