Dollar Index Jumps to 100.85 as Fed Rate-Hike Expectations Return, Crypto Slips
The US dollar logged its strongest session in months, and crypto markets moved lower in tandem. The dollar index rose to 100.85 on June 18, its highest level since November, after the Federal Open Market Committee (FOMC) concluded a meeting that prompted investors to reprice the path of interest rates.
At its June 17 meeting, the FOMC voted to keep the federal funds rate unchanged in a 3.5% to 3.75% range. Updated projections showed nine of 18 Fed officials now anticipating at least one additional rate hike before the end of 2026, with the median forecast at 3.8%.
Rate-hike expectations firmed quickly in market pricing. On Kalshi, the prediction market platform, the implied probability of a Fed hike later in 2026 rose to 57%, up from 35% just days earlier. The 22-percentage-point swing in a short window has been enough to force portfolio adjustments.
The shift comes after a period in which the Fed spent much of 2025 cutting rates following the aggressive hiking cycle of 2022 and 2023.
Bitcoin weakened to the low $62,000s on June 18, dropping sharply shortly after the FOMC statement, before recovering to around $64,000 later in the session. In the immediate aftermath, spot Bitcoin and Ether exchange-traded funds recorded combined net outflows of more than $111 million.
A firmer dollar tends to pressure crypto by increasing the appeal of US dollar'denominated assets, particularly Treasuries and money market funds, in a classic risk-off rotation. The ETF outflows reflect that shift away from higher-volatility exposures. The move also has a global impact: a stronger dollar raises the cost of Bitcoin for non-US buyers, which can weigh on international demand.
The last time the dollar index traded around these levels in November, Bitcoin was in a similar range before rallying into the end of 2025.
For investors, Kalshi's 57% implied probability of a 2026 hike is not a foregone conclusion, but it is sufficient to keep the dollar supported and crypto on the defensive unless incoming data changes the outlook. Key watch items include upcoming inflation readings, which will shape whether the Fed's hawkish tilt becomes policy, and ETF flow data, which can indicate whether institutions are rotating out of crypto or merely adjusting exposure short term. The distinction between a one-day $111 million outflow and a multi-week pattern could determine whether the move is a dip-buying opportunity or a broader regime shift.
