Bitcoin broke through $86,500 this week, clearing a resistance band that had capped it since early September, as falling oil prices and a golden cross on the daily chart reinforced the rally. A new Federal Reserve gauge, however, flags elevated leverage in the financial system that could amplify any future shock to risk assets, including Bitcoin.
Bitcoin clears resistance as oil slides on Iran hopes
Bitcoin traded near $86,559 on Tuesday, up 12.2% over the past week, after clearing the resistance band that had capped it since early September.
Nasdaq's rally tracks a broader risk-on mood. The Nasdaq Composite closed at a record Monday, up 2.26% as AI-linked names rallied, with Intel up 12% and AMD gaining about 10% to cross a $1 trillion market cap. Oil moved the other way: Brent crude briefly slipped below $98 a barrel after reports that Iran offered to reopen the Strait of Hormuz within days if Washington eases pressure.
Meanwhile the Federal Reserve raised its benchmark rate by 25 basis points to 3.75%-4% on September 16, its first hike since 2023, in a unanimous 12-0 vote after the Producer Price Index accelerated to 5.4% annually in August. Yet the Fed hasn't stopped adding cash to the system: it has kept buying short-term Treasury bills since December 2025 to keep bank reserves "ample," a move that works somewhat against the hike's tightening effect.
Technicals turn bullish, and a Fed gauge flags elevated leverage
On the chart, Bitcoin is back in a golden cross, the pattern that forms when its 50-day average price crosses above its 200-day average. Separately, data firm CryptoQuant said Bitcoin has crossed above its 365-day moving average, a signal it says has marked the start of past bull markets and one it hasn't given since March 2023. The firm added that long-term holders appear to have finished selling, opening the way for new investors.
But a separate Fed measure complicates the picture. The central bank's new Financial Vulnerability Index puts financial-leverage at 0.83, inside the "elevated" band of its historical distribution, tracking structural weakness rather than current stress. A related Fed analysis found large hedge funds held $4 trillion of gross Treasury exposure and $3 trillion of repo borrowing as of September 2025. Higher margin calls or tighter dealer capacity could force liquid-asset sales that weaken crypto spot demand, though the Fed's cited evidence hasn't observed that full chain play out.
Next test comes fast
If bulls keep control, Fibonacci extensions put the next targets at $90,763 and $95,074; a pullback below the $79,673 zone opens the door back to $75,436 and $73,617. On Myriad, a prediction market run by Decrypt's parent company Dastan, traders are pricing 48% odds Bitcoin hits $90,000 this month, against 25% odds it reaches $92,500.
The rally's next test arrives on a data calendar Bitcoin doesn't control: the Fed's next policy meeting lands October 27-28, when markets will learn whether September's hike was a one-off response to an oil shock or the first of several planned for the year.
Sources: Decrypt, CryptoSlate, Bitcoin Magazine
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