Bitcoin Drops Below $113K as Services Data Signals Economic Slowdown
Bitcoin slid beneath $113,000 on Tuesday after weaker-than-expected U.S. services data intensified concerns about a broader economic slowdown. The ISM Services PMI for July came in at 50.1, missing expectations of 51.5, and marking the third straight month of deteriorating momentum in one of the economy’s most resilient sectors.
July’s reading followed prints of 49.9 in May and 50.8 in June, suggesting that underlying strength in the services sector is faltering. Compounding the soft headline was a spike in the Prices Paid component, which surged to 69.9, its highest level in this economic cycle — raising fears of stagflation.
One comment from the ISM report pointed to rising tariffs as a driver of cost increases:
“Tariffs are causing additional costs… the cost is significant enough that we are postponing other projects to accommodate these cost changes.”
Markets React to Mounting Macro Pressures
The weak services print came on the heels of Friday’s major downward revision in job growth data — a one-two punch that shook confidence in the U.S. economy’s resilience. In response, Bitcoin (BTC) fell nearly 2% to $112,800, erasing gains from earlier in the session. The Nasdaq also reversed course, closing down 0.5%.
Fed Policy in Focus
The combination of stalling economic growth and elevated price pressures is complicating the Fed’s policy outlook. Some analysts now believe a rate cut may be warranted sooner than expected.
Economist Mark Zandi warned:
“The economy is on the precipice of recession. Consumer spending has flatlined, construction and manufacturing are in decline, and employment is likely to follow.”
Meanwhile, bond market veterans Lacy Hunt and Van Hoisington argued the Fed should act now:
“Tariff-related inflation is transitory. The real risk is the delayed but inevitable contraction in global economic activity. The Fed would be ill-advised to wait.”
As risk assets wobble and macro indicators soften, attention will remain fixed on whether the Fed will shift toward an accommodative stance — or hold firm in the face of inflationary data.
