Bitcoin's price rose on Friday, moving higher despite data revealing that U.S. inflation had increased. The leading cryptocurrency by market cap traded close to $78,749 after jumping 2% over a 24-hour period, reaching as high as $79,607 on Friday morning in New York.
The price spike followed reports that U.S. consumer prices accelerated in August, reinforcing expectations that the Federal Reserve will raise interest rates during its meeting next week. The consumer price index, excluding food and energy, climbed 0.3% in August from the previous month, exceeding expectations.
U.S. inflation has remained persistent due to the war with Iran, which has driven up oil prices and raised the costs of food, gasoline, and other goods. Higher inflation typically prompts the Federal Reserve to raise interest rates, a move that can potentially hinder bitcoin's upward price momentum. According to CME's FedWatch tool, traders estimate an 85% chance that interest rates will increase next week.
Historically, bitcoin has performed well in low interest rate environments, as increased liquidity allows individuals to purchase more of the cryptocurrency. Federal Reserve Chairman Kevin Warsh, who took leadership of the U.S. central bank in January, stated in a speech last month that he has "more work to do" to fight inflation.
Meanwhile, the U.S. faces an affordability crisis with rising oil prices becoming a prominent topic ahead of the midterm elections. President Donald Trump has assured voters that prices will be brought under control and has repeatedly pressured the central bank to lower interest rates.
Earlier in August, bitcoin experienced its largest run in years, supported by positive regulatory developments and an announcement from the U.S. Treasury. Treasury Secretary Scott Bessent stated that the department would double the size of its long-dated bond buybacks, benefiting non-yielding assets such as bitcoin and gold. The cryptocurrency also gained support after President Trump urged lawmakers to pass key crypto legislation known as the Clarity Act.
