Bitcoin dropped below $86,000 on Monday as demand for the token from both retail and institutional investors stays limited.

The flagship cryptocurrency slid 0.5% at $85,430 on Monday. Bitcoin tested $87,000, a key resistance level, in Asian trade overnight.

Flagging demand for the token is seen as the primary reason why prices have not made another sustainable push higher since soaring 13% last month to break the $80,000 mark for the first time since late January.

Macroeconomics are a central pressure point for bitcoin and other assets perceived as "risky" by investors. "The main risks are a stronger-than-expected CPI or PPI report, renewed oil-driven inflation, hawkish Fed guidance or another rise in long-term yields," Bitget Wallet's Lacie Zhang said in a note.

The flow of capital into bitcoin ETFs has sped up in recent days, although it remains a fraction of what was seen late last month. Bitcoin ETFs recorded a net inflow of $292.6 million in the first two days of October, according to Coinglass data.

The U.S. dollar rose close to the 18-month high reached overnight Sunday against a basket of currencies, as French fiscal concerns weighed on the euro.

The probability of an October Fed hike has fallen to below 20%, which could be helpful to push bitcoin prices forward, Coin Bureau's Nic Puckrin wrote in a note. "The next target is the psychologically significant $90,000, and $92,000 is the next resistance level to watch if it manages to break out of its current holding pattern," he said.

The Federal Reserve's next meeting will take place October 27 and 28, with the outcome of that meeting potentially easing the pressure seen on equity and commodity markets across the board. Last month's meeting resulted in the Fed raising its benchmark interest rate a quarter-point to 3.75% to 4.00%.