BTC, XRP, SOL, DOGE Resume Slow Grind Higher Post-Fed - Dollar Index Holds Strong Amid Crypto Rally
Crypto markets shrug off Fed uncertainty as major tokens push upward momentum.
The Resilience Play
Bitcoin leads the charge with steady gains while XRP and SOL show renewed strength—Dogecoin joins the party with retail traders jumping back in. No dramatic pumps, just consistent green candles across the board.
Dollar Defies Expectations
Meanwhile, the Dollar Index holds firm despite crypto's climb—proving traditional finance hasn't entirely lost its grip. Because nothing says stability like fiat currencies pretending they're still in control.
Market sentiment shifts from panic to patience as assets grind higher without the usual hype. Maybe investors finally realized screaming 'to the moon' doesn't actually affect orbital mechanics.
Dollar resilience could be a potential headwind
The path to new lifetime highs, however, may not be smooth, as the dollar is showing signs of life.
Despite the dovish Fed rate projections, the dollar index, which tracks the greenback's value against major currencies, including the euro, has bounced to 97.30, quickly recovering from the initial drop below the July 1 low of 96.37.
Perhaps the Fed's dovishness is already factored in by the foreign exchange markets. After all, the DXY has dropped 10% this year largely on the back of Fed rate cut bets. BTC, too, has rallied by 25% this year, hitting new highs above $124,000 in August, supported by dovish Fed expectations.
The dollar’s resilience likely reflects Chairman Jerome Powell’s emphasis that rapid, successive rate cuts are not guaranteed. He also highlighted that quantitative tightening (balance sheet runoff) remains in effect and inflation continues to run high. These remarks dampened the Optimism sparked by the dovish dot plot projections.
A strong bounce in the DXY could lead to financial tightening, potentially weighing on BTC and other risk assets.
Tail risk pricing
Sophisticated market participants are pricing tail risk, according to crypto financial platform BloFin.
Tail risk refers to low-probability, high-impact events, such as market crashes or major economic crises, that cause disproportionately large losses, often occurring at the "tails" of a probability distribution.
"As one of the most interest rate-sensitive assets, the recent increase in interest rate risk has led to a growing demand for tail protection, prompting market makers and traders to incorporate more interest rate risk into their pricing. Meanwhile, block trades data also includes a short-dated (about 4DTE) put spread order with 2,000 contracts (clearly intended for tail protection), which is not often seen," BloFin told CoinDesk.
A put spread is a strategy designed to profit from a decline in the price of the underlying asset, in this case, BTC.
