The cryptocurrency market experienced a substantial loss of over $500 million within just one hour, driven by investor reactions to the latest U.S. Producer Price Index (PPI) report. The report showed stronger-than-expected inflation data, effectively eliminating near-term expectations for Federal Reserve interest rate cuts, leading to bearish sentiment in the crypto market. \n\nU.S. PPI Data Fuels Market Correction \nWorries about inflation resurfaced on Thursday morning in the U.S., impacting riskier investments, including cryptocurrencies, which experienced a sharp drop. The July Producer Price Index (PPI), measuring wholesale prices, surged by 0.9% — significantly exceeding expectations of just 0.2%. This result came alongside a June reading of flat figures and a year-on-year increase of 3.3%, surpassing forecasts of 2.5% and 2.4% from June respectively. \n\nA strong PPI report often signifies positive momentum for the U.S. dollar due to its indication of rising inflation pressure at various stages within the supply chain. As a result, the dollar strengthened quickly. \n\nCore PPI data, excluding food and energy prices, also experienced a jump of 0.9% in July — significantly outpacing expectations of just 0.2%. Over the past year, core CPI has also risen by 3.7%, exceeding forecasts of 2.9% and up from 2.6% in June. \n\nSeveral experts suggest that tariffs implemented during the Trump administration may have also contributed to price increases, adding further fuel to the inflation fire. \n\nAs a result of these unexpected inflation figures, fears regarding the possibility of higher interest rates persist for longer to maintain control over inflation. This shift in market sentiment caused a selloff in riskier assets like Bitcoin (BTC) as investors shifted towards a more stable currency. However, despite this sell-off, the CME FedWatch tool still places the likelihood of a rate cut on September 17th at 96.5%. \nAfter hitting record highs of over $124,000 overnight, Bitcoin briefly dipped below $119,000 following news of the inflation report. Ether (ETH) also fell sharply, losing nearly 4% to trade around $4,500. Other altcoins that had recently been soaring, like Solana and XRP, suffered significant declines as well. \nOver $500 Million in Liquidations Seen Within an Hour \nNew labor market data didn’t alleviate these concerns either. Jobless claims for the week ending August 9 came in at 224,000, slightly below expectations of 228,000, while ongoing claims remained unchanged at 1.95 million. \nThe continued strength of the job market, coupled with this unexpected inflation surge, intensified the belief that the Federal Reserve might hold interest rates higher for longer to combat inflation. \nCoinglass reports an impressive $580 million worth of cryptocurrency positions were liquidated in just one hour following the PPI report. The majority of these losses, approximately $573 million, stemmed from long positions. This contrasts with only $8 million coming from short positions. This dramatic shift in market sentiment follows a day where Bitcoin had witnessed a surge to record highs.