Fresh ISM Services PMI Miss Triggers Bitcoin Drop, Raises Questions on Fed Timing

Bitcoin Slips Below $113K as Services PMI Sparks Recession Fears

Bitcoin fell back under $113,000 on Tuesday following another disappointing batch of U.S. economic data, with the ISM Services PMI showing signs of weakening momentum across one of the economy’s key sectors.

The index for July printed at 50.1, well below the 51.5 consensus estimate and barely above the contraction threshold. It’s the third consecutive month of underwhelming performance, following 49.9 in May and 50.8 in June — a clear trend of deceleration.

Adding to investor unease, the Prices Paid subindex surged to 69.9, its highest level this cycle, reviving concerns around stagflation. One survey respondent cited rising tariffs as a source of increased input costs, leading to delayed projects and budget reallocations.

Market Reaction

The weak data added to Friday’s downward revisions to payroll numbers, intensifying fears that the economy may be teetering on the edge of a slowdown. Bitcoin (BTC) dropped nearly 2% to $112,800, while the Nasdaq reversed early gains to close 0.5% lower.

Calls for Fed Action Grow Louder

The soft data has reignited debate over whether the Federal Reserve should cut rates sooner rather than later. Economist Mark Zandi pointed to multiple signs of strain, warning:

“The economy is on the precipice of recession. Consumer spending has stalled, construction is shrinking, and employment is set to decline. With inflation still present, it’s a difficult spot for the Fed.”

Veteran bond managers Lacy Hunt and Van Hoisington echoed the urgency, noting that tariff-driven inflation is likely temporary, while the real threat lies in the coming global contraction:

“The Fed should be pivoting toward easing now. Waiting could make the downturn more severe.”

With risk assets showing renewed sensitivity to macro data, all eyes are now on how policymakers respond in the coming weeks — and whether crypto assets like Bitcoin continue to reflect shifting expectations around growth and inflation.