Bitcoin came under heavy pressure on Wednesday after stronger-than-expected U.S. inflation data fueled concerns that the Federal Reserve could keep interest rates elevated for longer. The leading cryptocurrency briefly dropped below the $80,000 level as investors reacted to rising producer prices and shifting monetary policy expectations.
According to data released by the U.S. Department of Labor, the Core Producer Price Index (PPI), which excludes food and energy costs, increased 1% month-over-month in April 2026. The figure came in significantly above market expectations of 0.3% and marked the largest monthly increase since March 2022.
The annual Core PPI reading climbed to 5.2%, accelerating sharply from the previous month’s 4% increase. Analysts had expected the figure to come in around 4.3%, making the latest inflation report considerably hotter than forecasted.
The stronger inflation data immediately raised concerns that the Federal Reserve may maintain a hawkish monetary policy stance. Higher interest rates generally reduce liquidity across financial markets, often putting pressure on risk assets such as Bitcoin and cryptocurrencies.
Following the inflation report, Bitcoin fell below the psychologically important $80,000 level and touched approximately $79,046 during trading. The cryptocurrency declined around 1.5% over the past 24 hours, while its total market capitalization dropped to nearly $1.58 trillion.
Broader crypto markets also weakened as traders reassessed expectations for future Federal Reserve policy decisions and potential rate cuts.
At the same time, markets were also reacting to developments surrounding Kevin Warsh. The U.S. Senate voted 49-44 to advance Warsh’s nomination to serve on the Federal Reserve Board of Governors, increasing speculation that he could eventually replace Jerome Powell as Fed chair.
The growing uncertainty around future Federal Reserve leadership has further impacted investor sentiment. Traders are now increasingly pricing in the possibility that interest rates could remain within the current 3.50% to 3.75% range for an extended period.
According to CME FedWatch data, expectations for rate cuts in 2026 and 2027 have weakened considerably. Meanwhile, some market participants are even beginning to price in the possibility of another rate hike over the next year.
A prolonged period of high interest rates or additional rate hikes could continue pressuring Bitcoin and the broader crypto market, as tighter monetary conditions typically reduce investor appetite for speculative assets.
