Dollar Flexes Its Muscles Again — Bitcoin Watches From the Sidelines 🏋️

The US Dollar Index climbed to an 18-month high near 102.56 on Monday, extending a rally driven by expectations that the Federal Reserve will raise interest rates again this year. $BTC traded near $83,000 as the Nasdaq slipped and higher oil prices added pressure across equity markets.

A stronger dollar reduces the appeal of assets that pay no yield, such as Bitcoin, when US government bonds offer returns above 5%. The 10-year Treasury yield touched 5.35% on October 8, its highest in 24 years, and investors moved $166 billion into money-market funds that week. $BTC lost nearly 3% over the past seven days, while $ETH recorded larger losses. The S&P 500 also declined on Monday, with oil prices contributing to the move.

The Fed's benchmark rate currently stands at 3.75%–4%. Futures pricing indicates roughly an 87% chance of another hike by December, even though most traders expect no change at the October meeting. Cleveland Fed President Beth Hammack said persistent inflation remains a concern. "With each passing month, persistently elevated inflation raises the risks of an inflationary mindset becoming entrenched in the economy," Hammack stated.

Wednesday's CPI report is now the next major catalyst for markets. Economists forecast annual inflation at 3.7%, up from 3.4%, with core prices expected to rise 0.2% month over month. A higher-than-expected reading could strengthen the dollar further and add selling pressure to Bitcoin and equities, while a softer print could ease rate-hike expectations. Goldman Sachs, which upgraded global equities on Monday, cited higher interest rates as a key near-term risk to its outlook.