Bitcoin Rises Toward $79,000 as Inflation Data Reinforces Fed Rate Hike Bets

Bitcoin's price climbed toward $79,000 on Friday after a key U.S. inflation report aligned with economist expectations, reinforcing bets that the Federal Reserve will raise interest rates at its upcoming meeting next week.

At 10:09 AM ET, the world's largest cryptocurrency traded at $78,914.6, a gain of 1.9% for the session. However, the token is still on track for a weekly loss of nearly 2%, potentially ending a three-week winning streak as traders weigh monetary policy against broader geopolitical risks.

Inflation Report Aligns With Expectations

The U.S. Bureau of Labor Statistics reported Friday that the Consumer Price Index (CPI) rose 0.4% in August from the previous month, matching forecasts. The year-over-year inflation rate held steady at 3.4%, also in line with expectations. A significant driver of the monthly increase was a 3.9% surge in gasoline prices, which accounted for over a third of the headline gain.

Core CPI, which excludes volatile food and energy prices, rose 0.3% month-over-month, slightly hotter than the 0.2% consensus estimate. On an annual basis, core inflation eased to 2.4% from 2.5% in July, meeting projections. The data suggests that while underlying price pressures are moderating, they remain persistent enough to keep the Federal Reserve on a hawkish path.

Fed Hike Probabilities Rise

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Following the data release, market expectations for a central bank rate hike intensified. According to the CME Group's FedWatch Tool, traders are now pricing in an 86% probability of a 25-basis-point interest rate increase at the Fed's meeting next week, up from approximately 70% before the report.

While the in-line inflation numbers assuaged fears of a major upside surprise, the firm reading solidified the case for further monetary tightening. However, gains in risk assets like cryptocurrencies were capped by investor caution amid rising military tensions between the U.S. and Iran, which have contributed to a more than 11% spike in oil prices this week.

Altcoins Follow Bitcoin Higher

The broader cryptocurrency market saw modest gains, tracking Bitcoin's upward movement. Other major digital assets also advanced:

• Ethereum (ETH), the second-largest cryptocurrency, jumped over 6% to $2,610.17.
• XRP (XRP) gained 3.3%.
• Solana (SOL) and BNB (BNB) rose 3.9% and 3.3%, respectively.
• Cardano (ADA) posted a smaller gain of about 1%.