Bitcoin Holds as US Dollar Surges to 18-Month High
The US Dollar Index (DXY) hit an 18-month high of 102.5 on Monday, driven by stronger monetary policy and investor confidence. The index has climbed from around 99 in early September, now sitting above its 200-day moving average near 99, signaling bullish momentum. A stronger dollar typically increases the cost of dollar-denominated debt outside the US and reduces overseas investors’ purchasing power, creating headwinds for risk assets like stocks and Bitcoin.
The Federal Reserve’s September rate hike to 3.75% to 4% has bolstered the dollar’s strength. Markets anticipate further tightening, with a target range of 4.5% to 4.75% by June 2027. Rising Treasury yields, alongside inflation concerns and fiscal sustainability issues, have pushed long-term US yields to levels not seen in over two decades.
Euro weakness is another key factor, as it accounts for 57.6% of the DXY basket. The euro has dropped towards 1.12, a 17-month low, amid fiscal and political concerns in Europe. France faces pressure over its deficit and borrowing costs ahead of next year’s presidential election, while Spain’s snap election on Nov. 29 adds to regional uncertainty.
Despite these challenges, Bitcoin has held steady around $86,000 after a strong start to October, demonstrating resilience in the face of a climbing US Dollar.