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Investing.com-- Bitcoin rose slightly on Wednesday, boosted by a surprise decline in wholesale inflation that bolsters the odds of a Federal Reserve interest rate cut next week. Still, gains remained limited, with the world’s largest cryptocurrency continuing to trade in a range seen in the past few weeks.
Broader cryptocurrency prices also saw small advances, with the sector having largely lagged a broader rally in risk-driven markets, as traders priced in greater conviction that the Fed will reduce rates next week.
Bitcoin added 1.1% to $114,010 by 09:45 ET (13:45 GMT).
Major crypto stocks, including Circle Internet Group Inc (NYSE:CRCL) and Bullish Inc (NYSE:BLSH), rebounded from recent losses in overnight trade on Tuesday. But this did not translate into crypto price gains.
Bitcoin gains on unexpected wholesale inflation drop
Bitcoin climbed on Wednesday after new data showed that wholesale inflation unexpectedly cooled last month, reinforcing the case for the Fed to cut rates next week. Lower rates tend to benefit assets such as crypto, given that they free up more liquidity to be deployed for speculative trading.
The U.S. producer price index declined 0.1% on the month, holding the annual rate at 2.6%. Economists had expected a 0.3% monthly rise and a 3.3% yearly increase, according to the Bureau of Labor Statistics.
The pullback comes a day before the release of consumer price data, which is projected to show annual inflation accelerating to 2.9% from 2.7% in July.
The drop was driven in part by weaker business margins, likely reflecting the impact of import tariffs. The PPI and consumer price index reports together will help determine whether tariff effects prove temporary or signal broader inflation pressures.
The August data suggest some firms may be absorbing tariff costs through lower profits rather than passing them on to customers.
Despite the gains, Bitcoin remained largely within a tight trading range seen for nearly a month, after it tumbled from record highs hit in mid-August.
Uncertainty over the U.S. economy and interest rates was a major factor in Bitcoin’s performance, as traders avoided speculative assets in favor of more economically sensitive sectors.
A rally in technology stocks, which Bitcoin tends to track, was also driven chiefly by optimism over artificial intelligence, to which crypto markets have little exposure or relevance.
While Bitcoin had rallied to record highs on optimism over more crypto-friendly regulation in the U.S., markets were now awaiting another similar catalyst.
Emerging doubts over the long-term viability of corporate Bitcoin buying also weighed on crypto sentiment. The coin showed little positive reaction to recent buy actions by major corporate holders MicroStrategy (NASDAQ:MSTR) and Metaplanet Inc (TYO:3350) earlier in September.
The reading comes just a week before a Federal Reserve meeting. Futures tied to the Fed’s policy rate show traders expect a quarter-point cut at next week’s meeting, with similar moves projected at each gathering through year-end.
Crypto price today: Altcoins slightly higher with Bitcoin
Broader crypto prices edged higher on Wednesday, tracking Bitcoin.
World no.2 crypto Ether rose 1.4% to $4,413.36, while XRP remained muted at $3.01.
Solana advanced 2.8%, while Cardano edged higher nearly 1%.
Among meme tokens, Dogecoin fell 1.3%, while $TRUMP was up 0.9%.
(Ambar Warrick contributed to this report.)