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Bitcoin isn’t supposed to do this. The dollar climbs, and Bitcoin is supposed to fall. That’s the old rule. But right now, that rule is basically broken.
Bitcoin is sitting around $84,600. The Dollar Index — the DXY — just crossed above 101. Both are rising at the same time, and traders are scrambling to figure out what that actually means for the market going forward. It’s not a small move. The DXY started September near 98.4. That’s a meaningful jump in a short window, and Bitcoin didn’t flinch.
The climb started back in early August. Bitcoin was around $63,000 then — not a great look, not a terrible one, but pretty much rangebound and uninspiring. Then it moved. Fast. Bitcoin pushed all the way up to nearly $87,000 before pulling back and settling near where it sits now, around $84,600. That’s a gain of roughly $21,000 from the August lows. Significant.
The $900 Million Wipeout
Getting to $87,000 wasn’t clean. Nothing in crypto ever is.
When Bitcoin surged toward that level, it triggered a brutal squeeze. Nearly a billion dollars in crypto positions got liquidated — around $900 million, the majority of which were short positions. Traders who had bet against Bitcoin got wiped out fast. That kind of liquidation cascade is exactly what happens when a market moves hard against crowded trades, and clearly a lot of people were positioned for Bitcoin to drop, not rip.
Then came the reversal. Bitcoin fell to $83,508 on September 24. That drop triggered another round of liquidations — $583 million worth of crypto positions closed out in the selloff. So within a compressed stretch of time, well over a billion dollars in positions got forced out of the market. Wild swings. That’s the environment traders are navigating right now.
It’s worth sitting with those numbers. $900 million in shorts gone on the way up. $583 million in additional liquidations on the way back down. The market isn’t calm. It’s just that Bitcoin’s price level is holding relatively firm despite all that chaos underneath.
Fed Rate Hike, Muted Reaction
The Federal Reserve raised rates by 25 basis points, bringing the target range to 3.75–4%. Normally, that kind of move puts pressure on risk assets. Higher rates mean tighter financial conditions, and Bitcoin has historically been treated as a risk asset — something investors dump when the environment gets harder.
Didn’t really happen this time. Bitcoin held around $76,300 initially after the Fed decision, then climbed again, eventually approaching $87,000 before the recent pullback. The rate hike came and went without blowing up Bitcoin’s price. That’s probably meaningful, though it’s unclear yet whether it’s a one-time thing or a sign that Bitcoin is genuinely less sensitive to Fed moves than it used to be.
The dollar’s rise alongside Bitcoin’s resilience is the part that’s hard to explain neatly. Historically, a strong dollar makes Bitcoin less attractive. Investors tend to pile into dollar-denominated safe assets when the greenback strengthens, pulling money away from riskier plays. Bitcoin, in that framework, should be losing ground. But it’s not. It’s up massively from August and holding above $84,000 while the DXY sits above 101.
Does that mean Bitcoin has permanently decoupled from the dollar? Probably not. Not yet. The correlation between Bitcoin and the DXY has shifted before — there have been stretches of strong negative correlation and stretches where the relationship basically dissolved. What’s different now is that both are climbing simultaneously for a sustained stretch, and that doesn’t fit the old playbook cleanly.
What Analysts Are Watching Now
The focus shifts to US economic data. Inflation numbers, employment figures, and any signals from the Fed about future rate moves — all of it feeds directly into the DXY, and by extension, into how investors think about Bitcoin. If inflation stays sticky and the Fed keeps hiking, the dollar could push higher. Whether Bitcoin can keep shrugging that off is the open question.
Short-term, the liquidation data tells a story on its own. When you see $900 million in shorts get blown out on a single surge, it means the market was heavily positioned in one direction and got caught. That kind of positioning reset can sometimes clear the way for steadier price action — but it can also set up the next round of volatility once traders rebuild positions.
Bitcoin in February felt the weight of a strong dollar. Prices dropped, sentiment soured, and the inverse correlation looked rock solid. August through September told a different story. The dollar kept climbing and Bitcoin climbed with it, absorbing a Fed rate hike, two massive liquidation events, and still landing near $84,600.
The DXY is above 101. Bitcoin is above $84,000. Both numbers are just sitting there, side by side, defying what the textbook says should happen.
Frequently Asked Questions
How much did Bitcoin rise from its August lows?
Bitcoin climbed from around $63,000 in early August to nearly $87,000 before settling near $84,600, a gain of roughly $21,000 from the lows.
How much was liquidated when Bitcoin surged to $87,000?
Nearly $900 million in crypto positions were liquidated during Bitcoin’s surge, with the majority being short positions. A further $583 million was liquidated when Bitcoin dropped to $83,508 on September 24.
Why It Matters
The simultaneous rise of Bitcoin and the dollar challenges conventional market correlations, highlighting a potential shift in investor sentiment and asset behavior. This divergence may indicate that Bitcoin is increasingly viewed as a store of value independent of traditional fiat dynamics, suggesting a maturation of the cryptocurrency market. Moreover, the significant liquidation of short positions signals heightened volatility and could lead to further price fluctuations, emphasizing the need for traders to recalibrate their strategies in this evolving environment.
