Bitcoin Holds Near $86,000 as Dollar Index Hits 18-Month High

Bitcoin is showing resilience, holding steady around $86,000 even as the U.S. Dollar Index (DXY) climbed to approximately 102.5 on Monday. This level marks the highest point for the index in nearly 18 months, up from roughly 99 in early September.

The DXY, which tracks the dollar against a basket of six major currencies, is currently trading above its 200-day moving average. A stronger dollar often creates headwinds for risk assets like bitcoin by increasing the cost of dollar-denominated debt and reducing the purchasing power of overseas investors.

The dollar's recent strength is partly tied to the Federal Reserve's decision in September to raise interest rates by 25 basis points, bringing them to a range of 3.75% to 4%. Markets are currently anticipating further tightening, with a target range of 4.5% to 4.75% expected by June 2027. These rising rates, combined with higher Treasury yields, have made cash and government bonds more attractive to investors.

The euro, which makes up 57.6% of the DXY basket, has also contributed to the dollar's rise. The currency fell to a 17-month low near 1.12, pressured by fiscal concerns in France and political uncertainty in Spain, where a snap election has been called for Nov. 29.