Bitcoin Jumps Despite Higher Inflation Data

Bitcoin's price surged on Friday, reaching as high as $79,607, despite US inflation data showing that consumer prices accelerated in August. The cryptocurrency rose by 2% over a 24-hour period and was trading at around $78,749. The increase comes as the Federal Reserve prepares to meet next week and potentially raise interest rates.

The consumer price index, excluding food and energy, climbed 0.3% in August from a month earlier, which was higher than expected. This has led traders to believe there is an 85% chance that interest rates will be higher by next week, according to CME's FedWatch tool.

Borrowing costs are typically lower in a low-interest rate environment, but this has been beneficial for Bitcoin as it means people can buy more of the cryptocurrency with increased liquidity. The Federal Reserve Chairman Kevin Warsh said he had 'more work to do' to fight inflation last month.