Bitcoin Price Nears $79,000 as Inflation Data Solidifies Fed Rate Hike Bets

Bitcoin's price climbed toward $79,000 on Friday after a key U.S. inflation report came in line with expectations, easing investor fears of an unexpectedly hot reading and cementing bets on an imminent Federal Reserve rate hike. The world's largest cryptocurrency rose 1.9% to $78,914.6, though it remained on track for a weekly loss of nearly 2%.

Inflation Report Details

The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) increased by 0.4% in August from the previous month, matching forecasts. On an annual basis, inflation held steady at 3.4%, which was also in line with expectations.

A significant driver of the monthly increase was a 3.9% surge in gasoline prices. Core CPI, a metric that excludes volatile food and energy costs, rose 0.3% month-over-month, slightly above the 0.2% forecast. The annual core rate, however, cooled to 2.4% from 2.5% in July, meeting projections.

Market Impact and Fed Expectations

The in-line inflation data solidified investor expectations that the Federal Reserve will proceed with an interest rate hike at its policy meeting next week. According to the CME FedWatch Tool, the probability of a 25-basis-point rate increase jumped to 86% following the report, up from approximately 70% prior.

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While higher interest rates typically create headwinds for risk assets like cryptocurrencies, the removal of uncertainty around the inflation print provided a modest boost to market sentiment. However, gains were limited as traders remained cautious due to rising geopolitical tensions, according to the source report.

Broader Crypto Market Rallies

The positive sentiment extended across the digital asset market, with most major alternative cryptocurrencies, or altcoins, posting gains alongside Bitcoin.

• Ethereum (ETH), the second-largest cryptocurrency, climbed over 6% to $2,610.17.
• XRP rose by 3.3%.
• Solana (SOL) and Binance Coin (BNB) gained 3.9% and 3.3%, respectively.