Bitcoin Surges Towards $80K as US Inflation Data Conforms to Expectations

Bitcoin's price surged towards $80,000 on Friday after key US inflation data matched expectations. The Consumer Price Index (CPI) increased by 3.4% year-on-year in August, surpassing a forecast of 3.2%. This pushed implied probabilities of an interest-rate hike by the Federal Reserve at the September 16 meeting to 85%, up from 60% a week ago.

US bond yields also saw significant volatility, with the 30-year yield whipsawing between its highest levels since June 2004 and 5.309%. The rise in US yields is expected to have a negative impact on Bitcoin's price, as it directly undercuts the narrative that drove the cryptocurrency from $63,000 to $82,000 in August.

Despite this, traders are doubling down on bets that the Federal Reserve will raise interest rates by 0.25% at its September 16 meeting. This would be in line with the views of some officials, including Governor Christopher Waller, who has indicated that he would be inclined to hold rates in their current range if inflation data shows signs of disinflation.