August 1, 2025
5 min read
Evans SELEMANI
The Fed keeps rates steady, pushing the US Dollar Index to a two-month high and putting Bitcoin under pressure amid macroeconomic uncertainty.
Fed Holds Rates Steady, DXY Surges — Bitcoin Wavers Amid Uncertainty
The U.S. Dollar Index (DXY) has surged past 99.98 points, marking its highest level in two months. This rise follows the Federal Reserve's decision to keep interest rates unchanged, signaling a cautious stance on inflation but creating headwinds for Bitcoin and the broader crypto market.In Brief
- The DXY hits a two-month high, pressuring Bitcoin as the Fed holds interest rates steady.
- Despite calls for rate cuts, the Fed maintains rates between 4.25% and 4.50%, citing persistent inflation concerns.
- The strengthening dollar revives the negative correlation between the DXY and Bitcoin, complicating BTC's upward momentum.
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A Static Fed, a Rising Dollar
Contrary to expectations and political pressures—including calls from former President Donald Trump, whose net worth has recently increased significantly—the Federal Reserve, led by Jerome Powell, has kept interest rates steady. The current range remains at 4.25% to 4.50%, reflecting a cautious approach as inflation remains above the 2% target. This decision has fueled a powerful resurgence of the U.S. dollar amid ongoing macroeconomic uncertainty. The perceived monetary stability in the U.S. attracts capital flows, pushing the DXY higher. A stronger dollar traditionally poses challenges for Bitcoin, which is currently feeling the pressure.Bitcoin vs. DXY: A Longstanding Monetary Rivalry
Historically, Bitcoin and the U.S. dollar often move in opposite directions. The DXY acts as a reverse barometer for risk assets, with Bitcoin typically leading the pack. When the dollar strengthens, investors tend to retreat from cryptocurrencies. Recently, Bitcoin briefly dipped to around $115,760 before a slight recovery. This mild correction highlights Bitcoin’s vulnerability, especially if the DXY continues its ascent toward 101 points, as suggested by macro strategist Michael J. Kramer. Market algorithms are already signaling that a strong dollar often spells trouble for crypto assets.What Future for Bitcoin in a Pro-Dollar World?
The key question is not if Bitcoin will falter, but how long it can sustain itself amid a strengthening dollar. Fundamentally, Bitcoin’s limited supply and cautious institutional demand remain intact. However, if the Fed maintains its rate freeze and the DXY continues climbing, the likelihood of a near-term Bitcoin breakout toward $150,000 diminishes. Still, the crypto market is resilient, capable of adapting and sometimes thriving amid monetary uncertainty by repositioning as an alternative asset. Unexpected economic shocks—such as a deteriorating job market or a stock market pullback—could force the Fed to reconsider its stance, potentially benefiting Bitcoin.Source: Fed Holds Rates Steady, DXY Surges — Bitcoin Wavers Amid Uncertainty