Bitcoin dropped to the $88,000 level on Thursday as a rebound in the U.S. dollar and continued strength in commodities kept crypto trading in the background, a day after the Federal Reserve held interest rates steady.

Bitcoin slipped below $88,500 on Thursday after briefly trading above $89,000 earlier in the session, extending a choppy week of price action. Ether fell back toward $2,950, while solana, XRP and dogecoin posted deeper intraday losses, down between 2% and 4%. The pullback came alongside a firmer dollar and fading momentum in broader risk markets, with crypto continuing to lag strength in commodities and equities.

Crypto’s muted price action contrasted with sharper moves across macro markets. The dollar posted its biggest one-day gain since November on Wednesday after U.S. Treasury Secretary Scott Bessent said the administration continues to support a strong-dollar policy, pushing back against speculation that Washington was comfortable with a prolonged slide.

The move followed the Federal Reserve’s decision to leave rates unchanged after three cuts late last year, with policymakers signaling they want clearer evidence that inflation is cooling before moving again.

While the outcome was widely expected, the steady-policy message helped calm currency markets after days of volatility tied to fiscal concerns and political pressure on the central bank.

Commodities remained the dominant trade. Gold held near record levels after topping $5,500 an ounce earlier this week, while silver and copper stayed elevated following sharp rallies. The strength in metals has been driven by earlier dollar weakness, geopolitical risk and demand for assets viewed as stores of value amid uncertainty over government finances.

That backdrop has left crypto sidelined. Bitcoin, often framed as a hedge against currency debasement, has failed to keep pace with gold’s surge and is trading roughly 30% below its October peak even as metals and global equities sit near record highs.

Traders say bitcoin continues to behave more like a high-beta risk asset than a macro hedge, reacting to swings in the dollar and broader liquidity conditions rather than developing an independent narrative.

"Along with an 8% weakening of the dollar from April to June last year, Bitcoin rose by more than 50%,"Alex Kuptsikevich, chief market analyst at FxPro, said in an email. "Without delving too deeply into history, it is easy to see that the 4% drop in the dollar index in less than two weeks was met with a 30% jump in silver and a 15% jump in gold."

"Bitcoin continues to attempt to consolidate above $89K. This resistance level, approaching a round number, is reinforced by the 50-day moving average. BTC's position relative to this curve indicates a bearish market. Due to a relatively favourable external environment, it has managed to successfully defend support near $85K. Still, fluctuations about a third below the highs of the last two months are cause for pessimism," he added.

The past week reinforced that pattern, with crypto lagging during the metals rally and failing to respond meaningfully to earlier dollar weakness.

With the Fed decision behind markets, attention now turns to megacap tech earnings and whether moves in equities, bonds or currencies generate fresh cross-asset volatility.

Until then, bitcoin appears stuck in consolidation mode, holding key levels but lacking the momentum to rejoin the trades dominating global markets.