U.S. dollar index hits 18-month high near 102.5 as bitcoin holds around $86,000
In brief
- Dollar Index (DXY) reached roughly 102.5 Monday, its highest in nearly 18 months, per CoinDesk.
- CoinDesk tied the rally to a September Fed hike and rising Treasury yields.
- Euro fell toward 1.12, a 17-month low, amid French and Spanish political worries.
- Bitcoin held around $86,000 after a strong start to October, CoinDesk said.
The dollar's climb
The DXY measures the dollar against a basket of six major currencies. It climbed from around 99 in early September, per CoinDesk, and it's now above its 200-day moving average (also near 99), which the outlet called a sign of strengthening bullish momentum.
Rates are a big part of it. CoinDesk said the Federal Reserve's September decision to raise rates by 25 basis points to a range of 3.75% to 4% helped underpin the dollar, and that markets are pricing in further tightening, with a 4.5% to 4.75% target range the most likely outcome by June 2027. The report also tied rising Treasury yields to concerns over inflation, government borrowing and fiscal sustainability. Long-term U.S. yields have reached levels last seen more than two decades ago, according to CoinDesk.
Europe's side of the trade
The euro accounts for 57.6% of the DXY basket. That's why its slide matters so much here.
CoinDesk reported that the euro fell towards 1.12, a 17-month low, as fiscal and political concerns weighed on confidence. France faces increasing pressure over its deficit and borrowing costs ahead of next year's presidential election, the report said, and Spanish Prime Minister Pedro Sánchez has called a snap election for Nov. 29, adding to regional uncertainty.
What it means for bitcoin
CoinDesk's read is that a stronger dollar typically creates headwinds for risk assets. It raises the cost of servicing dollar-denominated debt outside the U.S. and cuts overseas investors' purchasing power. Paired with higher U.S. rates, it also makes cash and government bonds more attractive, which raises the hurdle for putting money into stocks and bitcoin.
So far, bitcoin isn't budging.
The asset held around $86,000 after a strong start to October, CoinDesk said, and a price widget on the report showed $85,973.57 when the page was captured.
Frequently asked questions
Why does a stronger U.S. dollar matter for bitcoin?
According to CoinDesk, a stronger dollar typically creates headwinds for risk assets. It raises the cost of servicing dollar-denominated debt outside the U.S. and reduces overseas investors' purchasing power. Combined with higher U.S. rates, it makes cash and government bonds more attractive, raising the hurdle for stocks and bitcoin.
What is pushing the dollar index higher?
CoinDesk pointed to the Federal Reserve's September 25 basis point hike to 3.75% to 4%, market pricing of further tightening, and rising Treasury yields. Euro weakness also played a big role, because the euro makes up 57.6% of the DXY basket and fell towards 1.12, a 17-month low.
