Bitcoin Experiences Rapid Resurgence to $100,000 on Groundbreaking $20 Trillion Valuation Projection
12/21 update below. This was initially posted on December 20
Bitcoin took a significant dive, following the decline in stock markets, after the Federal Reserve announced that inflation remained persistently high and sent shockwaves through the market due to BlackRock's actions.
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The value of bitcoin plunged towards $90,000 per bitcoin, causing the entire crypto market to drop and eliminating roughly $500 billion worth of value from the $3.2 trillion crypto market.
Bitcoin experienced a drop of around 10% in the previous 24 hours, with ethereum and other top ten cryptocurrencies such as solana and dogecoin seeing even greater declines between 15% and 25%.
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This week, Federal Reserve chairman Jerome Powell disheartened traders when he announced that interest rates would not decrease as rapidly as the Fed had initially believed, reducing the projected number of cuts to just two in 2025, down from four previously.
12/21 update: The price of bitcoin has rebounded, nearing the $100,000 mark per bitcoin after the most recent inflation data from the personal consumption expenditure (PCE) index showed a smaller-than-expected increase of 2.4% in November, just below the 2.5% estimate of economists polled by Reuters.
Cryptocurrencies that had also taken a nosedive, including ethereum, Ripple's XRP, and dogecoin, also bounced back, allowing the market to regain around $300 billion in value as traders increased their wagers on potential Federal Reserve interest rate cuts in the following year.
Meanwhile, Cathie Wood, the founder of the Ark Investment Management hedge fund, reaffirmed her bullish bitcoin price prediction during an interview on Bloomberg, estimating that the price of bitcoin would surpass $1 million by 2030, resulting in a market capitalization of around $20 trillion.
"[Bitcoin] is becoming even more scarce than gold," Wood said. "The difference between gold and bitcoin is, when the gold price rises, as it has, production rises, while the rate of increase in supply increases—something that cannot happen with bitcoin."
Over the coming weeks, bitcoin and crypto market observers anticipate that the price of bitcoin will continue to be subject to wild fluctuations.
"Just like water is always wet, bitcoin is always volatile," James Toledano, chief operating officer at Unity Wallet, said in emailed comments. "Its behavior is always mixed, and there is no discernible pattern at the end of the year or the start of the next. Sometimes the price rises in the new year, and at other times it falls. Historically, we can say that bitcoin exhibits mixed behavior over Christmas and New Year."
"Comments from the Federal Reserve served as a wake-up call," Danni Hewson, AJ Bell's head of financial analysis, said in emailed comments.
"Inflation remains stubbornly high, and tax cuts and tariffs could ignite a period of inflation. 'Risk appetite has been scaled back. Trump 2.0 is an unknown, and no one wants to be overexposed if the environment proves unfavorable."
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In the meantime, bitcoin price and crypto market analysts have warned of further volatility ahead.
"Expect to see volatility levels for both ethereum and bitcoin increase as we approach early 2025, particularly around the December 27, 2025 settlement," Nick Forster, founder of decentralized finance (DeFi) protocol Derive, said in emailed comments, but adding that he expects the price of bitcoin and the wider crypto market to recover during 2025.
"We're observing a trend where funds and high net-worth individuals are moving into options with longer expirations, such as those set for September and beyond, reflecting a positive outlook for 2025. This shift is evident from the open interest in calls significantly outnumbering puts on Derive.xyz, signaling strong market optimism.”
Following the Federal Reserve's announcement, the Bitcoin price plunged, causing a crypto market crash with Bitcoin dropping towards $90,000 per coin. This crypto crash wiped out approximately $500 billion from the overall crypto market, which was valued at $3.2 trillion.
The recent market volatility and Bitcoin crash have led some analysts to predict that Bitcoin and the wider crypto market will experience further volatility in the coming months, potentially even around December 2025.
