Bitcoin Price News: Wholesale Prices Drop and Push BTC Higher – Next Stop $130K?

Bitcoin (BTC) has gone up by 2.4% in the past 24 hours to $114,000 and trading volumes have surged by 19% after a surprising economic report.

According to the Bureau of Labor Statistics (BLS), the annualized Producer Price Index (PPI) reading surprised everyone today as prices retreated by 0.1% compared to a consensus estimate of a 0.3% increase.

Economic Calendar Wednesday/Thursday (U.S.) – Source: FX Empire

This possibly confirmed the market’s view that the Federal Reserve will cut rates during its September 17 FOMC meeting.

The consensus view according to data compiled by FedWatch is that the U.S. central bank will cut rates by 25 basis points this month followed by another cut of the same magnitude in October.

Lower nominal rates typically favor risky assets like cryptocurrencies as investors’ appetite for higher yields drives them to riskier instruments.

Altcoin Season Kicks Off But BTC Could Still Rally to New Heights

The rally caused by this unexpected drop in the PPI resulted in $120 million worth of short positions being wiped out of the market. Bitcoin and Ethereum (ETH) account for the largest percentage of these liquidations.

Alongside BTC, top altcoins like Solana (SOL) and BNB Chain (BNB) booked some strong gains as well while the latter made a new all-time high at $900.

The fact that altcoins are outperforming the top crypto is a sign that altcoin season has started. Investors could now rebalance their portfolios to favor more exotic tokens as these may offer higher returns during the rest of the cycle.

CMC Altcoin Season Index – Source: CoinMarketCap

The Altcoin Season Index compiled by CoinMarketCap currently sits at 59 but the combined market cap of tokens in this category has already climbed to a level that confirms a tactical rotation toward these assets.

This does not necessarily mean that BTC won’t climb higher as bullish momentum tends to hit the biggest asset first and then spill over to the smaller ones.

BTC Sets Its Eyes on $130K After Bullish Breakout

The daily chart shows that BTC has broken above a key resistance at $112K that could have marked the beginning of the token’s next leg up.

BTC/USD Daily Chart (Bitstamp) – Source: TradingView

Based on the trajectory that BTC has had lately, this move could push the top crypto to $130,000 next. If trading volumes surge above their average, they would confirm this bullish outlook.

The Relative Strength Index (RSI) has already sent a buy signal as it has surged above the 14-day moving average. These are strong technical indications that BTC is getting ready to move.

Moving forward, the market will have its eyes set on tomorrow’s consumer price index (CPI) data to confirm what the PPI said today. If the CPI turns out to be lower than expected, we could expect a much stronger rally right after the numbers are published.

Similarly, if the Fed lowers rates by more than 25 basis points for some reason, that would surprise the market and would likely cause a strong reaction in prices as investors may reassess their valuations.

The most logical target will still be $130K but the rally could accelerate beyond that number if market conditions improve significantly.