Dollar Rises to 18-Month High and Pressures Bitcoin

The Dollar Index (DXY) rose to an 18-month high around the 102.56 mark. Against this backdrop, Bitcoin is holding around $83,000, while the Nasdaq technology index shows a downward trend.

The current strengthening of the US currency is driven by expectations of another tightening of the Federal Reserve's policy. An increase in the key rate raises the yield on dollar instruments, stimulating a capital flow from risky assets.

Bitcoin does not generate interest income for holders. When the yield on US Treasury bonds exceeds 5%, investors prefer to shift funds to less risky assets. The rise in the dollar traditionally reduces demand for high-risk instruments, primarily digital assets and technology company stocks.

Negative dynamics are already visible in the markets. Over the past week, Bitcoin has fallen by almost 3%, and Ethereum has lost even more. On Monday, the S&P 500 and Nasdaq declined, and the rise in oil prices increased tension. The yield on 10-year US bonds rose to 5.35% on October 8, reaching a 24-year high. During the same period, investors directed $166 billion into money market funds. The Fed's base rate is currently 3.75–4%. Futures indicate about an 87% chance of another hike by December, although most market participants do not expect changes in October.

Cleveland Federal Reserve Bank President Beth Hammack expressed concerns about inflation: "With each passing month, persistent inflation increasingly entrenches inflation expectations in the economy."

The release of the latest consumer price index could set the market's direction. Analysts forecast annual inflation at 3.7% compared to 3.4% the previous month, with core prices rising by 0.2% for the month. Figures above expectations could strengthen the dollar and increase pressure on cryptocurrencies and stocks. More moderate numbers would ease expectations of a strict Fed policy and give markets a chance to recover. Goldman Sachs experts, who have raised their forecast for global stocks, cite the high level of rates as a key risk for the financial sector.