Bitcoin Surges Above $85,000 as Inflation Data Beats Expectations

The US Federal Reserve's preferred inflation gauge, the PCE index, rose by 0.3% in August and 3.4% from a year earlier, below economists' expectations of 0.4% and 3.7%. Core PCE, which strips out volatile food and energy prices, rose 0.2% on the month and 3.0% annually, against forecasts of 0.3% and 3.3%.

Bitcoin reacted positively to this data, pushing above $85,000 to a high of $85,598.94 before easing back to $84,376.09. The total market capitalization of the crypto ecosystem is up 0.6%, just below $3 trillion.

The PCE numbers change the October conversation, with CME's FedWatch tool now showing a 62% chance the Fed holds rates and a 37% chance of a 25-basis-point hike. Hike bets had already been fading of late, which bodes well for risk assets.