Bitcoin rose on Friday even as new U.S. inflation data showed price pressures had picked up. The largest cryptocurrency by market capitalization was recently trading near $78,749, up 2% over the past 24 hours. In New York morning trading, it climbed as high as $79,607.
Bitcoin rises after stronger inflation data
The move came after data showed U.S. consumer prices accelerated in August, reinforcing expectations that the Federal Reserve will raise interest rates next week.
Core consumer prices, which exclude food and energy, rose 0.3% in August from a month earlier, above expectations. The report said inflation in the U.S. has been difficult to contain because the war with Iran pushed oil prices higher, lifting the cost of food, gasoline, and other goods.
Higher inflation usually points to a greater chance of Fed rate increases, a backdrop that could limit further gains in bitcoin. According to CME’s FedWatch tool, traders see an 85% chance that rates will be higher by next week. The Federal Reserve is set to meet next week and announce its decision on borrowing costs.
Rate expectations remain central to bitcoin trading
Bitcoin has typically performed well in a low-rate environment because stronger liquidity can give investors more room to buy the asset, according to the report.
Federal Reserve Chairman Kevin Warsh, who took over in January, delivered his first speech as head of the U.S. central bank last month and said he still had more work to do in fighting inflation.
The article also said the U.S. is in the middle of an affordability crisis, while rising oil prices have become a major issue ahead of the midterm elections. President Donald Trump has told voters that prices will come under control and has repeatedly pressed the central bank to lower interest rates.
August rally was linked to regulatory and Treasury news
Bitcoin Magazine said bitcoin posted its biggest run in years in August after favorable regulatory news and an announcement from the U.S. Treasury.
Treasury Secretary Scott Bessent said the department would double the size of its long-dated bond buybacks, a move the report said helped support non-yielding assets such as bitcoin and gold. Bitcoin then got another boost after President Donald Trump urged lawmakers to push key crypto legislation, the Clarity Act, across the line.
The original story first appeared in Bitcoin Magazine and was written by Mathew Di Salvo.