Bitcoin Surpasses $85,000 on Softer-Than-Expected Inflation Data

Bitcoin price jumps — Bitcoin’s price surged past $85,000 on Wednesday after U.S. inflation data came in lighter than economists had forecast, easing pressure on the Federal Reserve to raise interest rates.

The personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 3.4% year-over-year in August, with the core measure increasing 3%. Both figures were below market estimates. Bitcoin’s price reacted positively, jumping to an intraday high of $85,518 before trading around $84,246.

The softer data reduces the likelihood of an interest rate hike from the Fed at its next meeting. Bitcoin and other risk assets have historically performed well in a lower-rate environment. The rally follows a recent surge to over $87,000 earlier in the month.

Market analysts suggest investors are looking past the Fed’s previous hawkish stance, as Chair Kevin Warsh had stated the central bank had “more work to do” to fight inflation. The price action indicates traders may not expect a sustained series of aggressive rate hikes.