Bitcoin held firm above $86,000 on Monday after weaker U.S. jobs data reduced the chances of an October rate hike, lending a boost to risk assets despite a stronger dollar.

The flagship cryptocurrency was up 0.6% at $86,332, after testing $87,000 in Asian trade, which marks a key resistance level, analysts said.

Optimism rose in the cryptocurrency markets following weaker-than-expected U.S. payrolls data, which reinforces expectations that the Federal Reserve will keep interest rates unchanged at its meeting this month.

The probability of an October Fed hike has fallen to below 20% and bitcoin could be on for another strong week as a result, 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.

Meanwhile, the dollar rose close to a near 18-month peak reached overnight Sunday against a basket of currencies, supported by French fiscal concerns weighing on the euro.

Bitcoin is well-supported despite a strong dollar and elevated Treasury yields but the next leg up depends on overall liquidity conditions, Zaye Capital Markets' Naeem Aslam wrote in a note.

"Weaker economic data only becomes sustainably bullish if it translates into lower yields, a softer dollar and continued ETF inflows," he said.