Ethereum drops over 5% as risk appetite drops following US inflation data

Ethereum prices fell alongside most other cryptocurrencies during Thursday’s trading, as risk appetite weakened following higher-than-expected US inflation data that reduced the likelihood of a Federal Reserve rate cut.

Government data showed that the US Producer Price Index rose 0.9% month-on-month in July, well above analysts’ expectations of 0.2%.

Initial jobless claims fell by 3,000 to 224,000 in the week ending August 9, compared to forecasts for a rise to 228,000. This was the first decline in three weeks, signaling ongoing labor market resilience.

Earlier this week, similar US data showed that annual consumer price inflation remained steady at 2.7% in July, below expectations for an increase to 2.8%.

Core inflation — which excludes volatile food and energy prices — rose to 3.1% in July, above forecasts for a 3% reading and compared with 2.9% in June.

According to the FedWatch tool, investors see a 99% probability of a 25 basis point Fed rate cut in September, compared with 94% yesterday and 57% a month ago. Analysts also estimate a 61% probability of another 25 basis point cut in October (up from 34% a month ago), and a 51% probability of a similar cut in December (up from 25% a month ago).

Separately, US Treasury Secretary Scott Bessent said that the administration of President Donald Trump has no plans to purchase cryptocurrencies or include them in official reserves at this time. He explained that the priority remains managing financial assets and seizures in a way that ensures economic stability and protects against market volatility.

Bessent added that dealing with cryptocurrencies requires clear regulatory policies and a solid legislative framework that balances support for digital sector innovation with safeguarding the financial system from potential risks.

Ethereum

As for trading, Ethereum dropped 4.5% to $4,518.2 on CoinMarketCap at 21:46 GMT.