Bitcoin is proving resilient around $86,000 even as a powerful rally in the U.S. dollar and elevated Treasury yields create a less favorable backdrop for risk assets.

The dollar’s advance has been partly fueled by weakness in the euro, where concerns over France’s finances and political uncertainty in Spain are weighing on sentiment. Although major currencies tend to be less volatile than equities and crypto, changes in monetary policy and investor confidence can still lead to large price movements.

The U.S. Dollar Index (DXY) reached approximately 102.5 on Monday, its highest point in nearly 18 months. The index has risen from about 99 in early September and is now trading decisively above its 200-day moving average, which sits near 99. The move suggests that the dollar’s upward trend is gaining strength.

For crypto markets, a stronger dollar can be a significant headwind. It increases the cost of servicing dollar-denominated debt for borrowers outside the U.S. and reduces overseas investors’ purchasing power. Higher U.S. interest rates can amplify that effect by making cash and government securities more attractive compared with riskier assets such as stocks and bitcoin.

The Federal Reserve raised its policy rate by 25 basis points in September, bringing the target range to 3.75%-4%. Markets are now pricing in additional tightening, with a 4.5%-4.75% range viewed as the most likely policy outcome by June 2027.

Treasury yields have climbed alongside the dollar as investors weigh inflation, increased government borrowing and concerns about long-term fiscal sustainability. Long-term U.S. yields are now at levels last seen more than 20 years ago.

The euro’s decline has amplified the DXY move because it represents 57.6% of the index. The currency has fallen toward $1.12, its weakest level in 17 months.

France is under pressure over its fiscal deficit and borrowing costs as next year’s presidential election approaches. Spain is also facing political uncertainty after Prime Minister Pedro Sánchez called a snap election for Nov. 29.

So far, bitcoin has absorbed the macro pressure relatively well. BTC continues to trade near $86,000 following its strong start to October, despite the dollar reaching levels that could challenge further gains.