Bitcoin jumps to nearly $79,000 despite hot inflation data
Bitcoin price defies high inflation report
The price of Bitcoin rose on Friday, even as new data showed that inflation in the United States is getting worse. The world’s largest cryptocurrency by value climbed 2% over 24 hours, reaching as high as $79,607 before settling near $78,749.
Typically, rising prices for everyday goods make investors nervous about the economy. Higher inflation often leads central banks to increase borrowing costs, which can hurt riskier investments. However, Bitcoin traders seem to be ignoring the negative outlook for now.
Key market numbers
- Bitcoin hit an intraday high of $79,607 on Friday morning.
- The price is currently trading around $78,749, up 2% in a day.
- Core inflation (excluding food and energy) rose 0.3% in August, higher than economists predicted.
- Traders see an 85% chance of an interest rate hike next week, according to CME Group data.
Why rates might go up
The consumer price index showed that costs are rising faster than expected. A major driver is the ongoing war with Iran, which has pushed oil prices higher. More expensive oil increases the cost of gasoline, food, and shipping, keeping overall inflation hot.
Federal Reserve Chairman Kevin Warsh, who took office in January, acknowledged last month that he has “more work to do” to bring prices down. Higher interest rates usually make it more expensive to borrow money, which slows down spending and investing. This environment is generally hard for cryptocurrencies like Bitcoin, which often perform better when money is cheap and easy to get.
Political pressure and past gains
President Donald Trump has repeatedly asked the Federal Reserve to lower interest rates to help voters deal with an affordability crisis ahead of the midterm elections. Meanwhile, Bitcoin recently benefited from positive regulatory moves. In August, Treasury Secretary Scott Bessent announced that the US Treasury would double its bond buybacks. This move helped non-yielding assets like Bitcoin and gold, contributing to one of Bitcoin’s biggest rallies in years.
Why this matters
Bitcoin’s ability to rise despite bad economic data suggests that investors are looking past immediate inflation fears. If the Federal Reserve does raise rates next week as expected, it remains unclear whether Bitcoin will keep its current momentum or pull back. Traders are now waiting for the Fed’s meeting to see if the central bank will signal future rate cuts or commit to higher borrowing costs for longer.
