The world's leading cryptocurrency, Bitcoin (BTC), experienced significant volatility following the Federal Reserve's (Fed’s) latest monetary policy announcement, briefly dipping below the psychological $100,000 mark before staging a recovery.
The price action reflects broader market uncertainty as investors digest the Fed's more conservative approach to rate cuts in 2025.
Why Is Bitcoin Down? $100K Secured
Bitcoin touched $98,760 in a sharp downturn that erased nearly $10,000 from its recent all-time high (ATH). The movement coincided with a broader sell-off in risk assets, as market participants adjusted their positions following the Fed's hawkish guidance.
The cryptocurrency market's reaction mirrors the complex interplay between monetary policy and digital asset valuations. While the Fed delivered its third consecutive rate cut, the central bank's cautious stance on future reductions triggered a reassessment of risk positions across multiple asset classes.
“In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent,” the Fed commented in the official statement.
As a result, Bitcoin fell by 5.6% during Wednesday's session, testing levels below the $100,000 mark. This marked the largest single-day drop since August 5, when the price declined by 7%, hitting a low of $49,000. Today (Thursday, December 19, 2024), Bitcoin also tested levels below the psychological support of $100,000. However, at the time of writing, it has modestly rebounded and is trading at $101,600 on Binance.
The cryptocurrency's trajectory has been significantly influenced by political developments, with a 50% surge following the November presidential election. The president-elect's pro-crypto stance and proposals for a national Bitcoin reserve have fundamentally altered market sentiment, though regulatory uncertainties persist.
Federal Reserve Chair Jerome Powell says the Fed is "not allowed to own Bitcoin"They weren't allowed to own Corporate Bonds before Covid either.Rules change... ???? pic.twitter.com/3UBBUuKtdF
— Bitcoin Archive (@BTC_Archive) December 18, 2024
$661 Million in Longs Vanished
Over the past 24 hours, more than $661 million in leveraged long positions have been liquidated in the cryptocurrency market, according to Coinglass data. The majority of these liquidations were tied to Bitcoin ($110 million) and Ethereum ($109 million).
Bitcoin's decline fueled a broader depreciation across the altcoin market. Alongside the oldest cryptocurrency, Ethereum also saw significant losses, dropping 4.4%, along with XRP (5.4%), Solana (2.5%), and Dogecoin (5.6%).
The total market capitalization shrank to $3.7 trillion, with Bitcoin accounting for over $2 trillion of that value.
Options market activity has shown increased interest in downside protection, with traders seeking hedging strategies amid heightened volatility. Market specialists suggest the possibility of short-term price movements toward the low $90,000 range, though such dips are expected to be temporary.
BTC Technical Analysis: Will Bitcoin Keep Going Down?
In my view, the $100,000 level will serve as a key support floor, one that bears will find challenging to break. Additionally, Bitcoin benefits from short-term support provided by the 20-day exponential moving average (20 EMA).
The post-Fed decision movement was significant, and without the substantial accumulation of buy orders near $100K, we would likely be seeing even lower BTC prices. I believe this six-figure value provides Bitcoin with room for a rebound.
At this moment, the critical resistance level is the previous all-time high (ATH) of nearly $108,000, tested on December 15. My outlook will shift if Bitcoin drops below the current support, though this is still no reason to panic. BTC has a dense network of support levels ahead, but three key levels stand out.
Bitcoin Price Support Levels
- $94,400–$94,300 – 23.6% Fibonacci retracement, reinforced by local lows.
- $90,000 – Another psychological level and the low from December 5.
- $72,328 – 61.8% Fibonacci retracement, aligning with the May-June highs.
Only if Bitcoin falls below $72,000 will I change my stance to bearish. Until then, I’ll view all downward corrections as opportunities to buy Bitcoin at more attractive prices.
Bitcoin Long-Term Price Prediction
Investment management firm VanEck has unveiled its bold forecasts for the cryptocurrency market in 2025, predicting significant price peaks followed by a period of market consolidation.
“Following this first peak, we anticipate a 30% retracement in BTC, with altcoins facing sharper declines of up to 60% as the market consolidates during the summer,” VanEck’s Matthew Sigel forecasted. “However, a recovery is likely in the fall, with major tokens regaining momentum and reclaiming previous all-time highs by the end of the year.”
VanEck expects the ongoing crypto bull market to culminate in its first major peak during Q1 2025. The firm anticipates Bitcoin reaching $180,000, with Ethereum exceeding $6,000. Other notable cryptocurrencies like Solana and Sui are projected to hit $500 and $10, respectively.
Broader Bitcoin Price Predictions for 2025
VanEck’s forecast is one of several ambitious projections for Bitcoin in 2025. Other prominent predictions include:
These forecasts underline the diverse perspectives within the cryptocurrency industry, highlighting a mix of macroeconomic factors and market dynamics driving optimism for Bitcoin and the broader crypto ecosystem in 2025.
For those interested in staying updated on the latest cryptocurrency trends, you can explore my other analyses. Last week, I examined whether Dogecoin has the potential to reach $10 and reviewed the latest developments surrounding Ripple and the XRP token's price movements.
FAQ, Bitcoin Price
Why is Bitcoin dropping today?
Bitcoin's decline is primarily due to the Federal Reserve's hawkish stance on future interest rate cuts. While the Fed delivered its third consecutive rate cut, they signaled fewer rate reductions for 2025 than previously expected, causing investors to reassess their positions in speculative assets.
Is Bitcoin having issues?
No, Bitcoin isn't experiencing technical issues. The current price movement is a market reaction to broader macroeconomic factors. The cryptocurrency dropped to $98,760 before stabilizing above $100,000, reflecting normal market dynamics in response to monetary policy changes.
Is Bitcoin predicted to go up?
Multiple analysts maintain bullish long-term predictions for Bitcoin: VanEck forecasts $180,000 by Q1 2025, Standard Chartered maintains a $200,000 target for 2025, Tim Draper projects $250,000 by the end of 2025. The average predicted trading price for December 2024 is around $111,724. These predictions are based on factors such as institutional adoption and regulatory clarity.
This article was written by Damian Chmiel at www.financemagnates.com.
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