Bitcoin Breaks $79,000 as Traders Look Past Inflation Surprise

On Friday, bitcoin’s price increased even though figures showed U.S. inflation had climbed.

The largest digital asset by market value changed hands near $78,749, having gained 2% in the prior 24 hours. During Friday’s New York morning session, it peaked at $79,607.

The advance followed a report showing U.S. consumer prices picked up in August, cementing bets that the Federal Reserve would increase borrowing costs the following week.

Core inflation, which strips out food and energy, rose 0.3% month-on-month in August, exceeding forecasts.

U.S. inflation has proven stubborn partly because of the conflict with Iran, which has driven oil prices higher, pushing up expenses for food, fuel and other items.

Elevated inflation usually prompts the Fed to tighten policy, potentially halting bitcoin’s upward momentum.

CME Group’s FedWatch tool indicates traders assign an 85% probability to an interest-rate increase at the central bank’s meeting next week, when policymakers will announce their decision on borrowing costs.

Bitcoin tends to thrive when rates are low, as cheaper borrowing boosts liquidity and encourages purchases of the cryptocurrency.

Kevin Warsh, who became Fed chair in January, delivered his inaugural address as central bank chief last month, stating he had “more work to do” to combat inflation.

The country faces an affordability squeeze, and climbing oil prices are a key issue ahead of the midterm elections.

President Donald Trump has told voters prices will be brought under control and has consistently pressed the Fed to cut rates.

Bitcoin posted its largest rally in years in August, spurred by favorable regulatory developments and a Treasury Department announcement.

Scott Bessent, the Treasury secretary, said the department would double its purchases of long-term bonds, a move that supported non-yielding assets such as bitcoin and gold. The digital currency also gained after Trump pressed Congress to pass the Clarity Act, a major crypto bill.