The U.S. Producer Price Index (PPI) for December came in lower than expected, recording a 0.2% month-over-month increase, below the forecasted 0.3%, marking the lowest monthly growth since September 2024. The year-over-year PPI also rose 3.3%, falling short of estimates of 3.4% but reaching its highest level since February 2023.

Core PPI, which excludes volatile components like food and energy, remained unchanged month-over-month, missing the 0.3% estimate. On a year-over-year basis, Core PPI increased 3.5%, also below the expected 3.8%.

Bitcoin Surges Amid Slowing Inflation Data

Shortly after the PPI data release, Bitcoin’s price rose by 1.5%, briefly reaching $97,124, before stabilizing at a 1% gain. Analysts suggest that the softer inflation data eased market concerns about aggressive Federal Reserve rate hikes, leading to a positive reaction in risk assets, including cryptocurrencies.

The broader crypto market followed Bitcoin’s lead, with the top 10 cryptocurrencies trading in the green. Ethereum climbed by 1.3%, while Solana and XRP posted gains of 1.8% and 1.1%, respectively.

The softer-than-expected PPI figures could signal easing inflationary pressures, bolstering market sentiment ahead of Wednesday’s Consumer Price Index (CPI) report.

Should CPI also reflect slowing inflation, it could strengthen the case for the Federal Reserve to hold interest rates steady in the coming months, potentially providing further support to cryptocurrencies and equities.