A stronger US Dollar Index above 100 signals tighter liquidity, weighing on Bitcoin and equities amid Fed rate hike expectations.
The US Dollar Index (DXY) climbed above 100 for the first time since May 2025, reaching a 13-month high. The move reflects growing expectations of prolonged higher US interest rates, with the Federal Reserve holding rates at 3.50% to 3.75% and hinting at potential hikes. May’s consumer price inflation rose 4.2%, the highest since April 2023, reinforcing the Fed’s hawkish stance.
Historically, a rising dollar correlates with declines in risk assets like Bitcoin and equities. BTC fell nearly 3% to $62,368 over 24 hours, while global equities showed volatility. Speculative positioning in the dollar has also surged, with net long bets nearing $28 billion, matching peaks seen in 2024 and 2025.
The dollar’s strength tightens financial conditions worldwide, raising borrowing costs for foreign entities and draining liquidity from global markets. Analysts anticipate further upside for the dollar, extending pressure on risk assets into the summer.