Dollar Climbs to 13-Month High on Fed Hike Bets, Weighs on Bitcoin

The US dollar is back in the driver's seat, and crypto is taking the hit. The dollar index (DXY) rose to a 13-month high on June 24 as investors leaned into safe-haven positioning amid renewed expectations for tighter Federal Reserve policy and a broad selloff in tech stocks. Over the same period, Bitcoin has been trading below $65,000 in mid-June. Fed expectations shift back toward hikes The Federal Reserve left its benchmark rate unchanged at 3.75% after the June 17 FOMC meeting. Still, rate-hike chatter has returned. CME FedWatch data now shows markets assigning about a 32% probability to a 25-basis-point increase at the July 29 FOMC meeting. Futures pricing also points to the fed funds rate edging up to roughly 3.9% by October, which would represent the first uptick since the Fed's aggressive tightening cycle in 2022 and 2023. Sticky inflation, led by energy, is driving the repricing The shift has been fueled by inflation that has proved difficult to tame, particularly via energy. Oil prices have remained elevated, filtering into broader consumer price measures and keeping policymakers' hawkish stance in play. Why a stronger dollar matters for crypto Bitcoin has historically moved in the opposite direction of the DXY: when the dollar strengthens, Bitcoin often softens. With BTC holding below $65,000 in mid-June, the recent action fits that pattern. Ethereum is facing similar macro pressure. As the second-largest cryptocurrency by market capitalization, it often tracks Bitcoin's broader, rate-driven moves. What investors are watching next The July 29 FOMC meeting is shaping up as the key near-term catalyst across both traditional and digital asset markets. If the Fed signals a hike is firmly on the table for the second half of the year—or delivers a surprise 25-basis-point increase—the dollar rally could extend and crypto may see renewed selling. Energy remains the swing factor. A pullback in oil would ease one of the main inflation forces behind the market's hawkish reset. For crypto-focused investors, the checklist is clear: monitor the DXY, track FedWatch probabilities, and keep a close eye on energy prices.