12/21 update below. This post was originally published on December 20

Bitcoin has fallen sharply, dropping along with stock markets after the Federal Reserve warned inflation remained sticky and BlackRock spooked the market.

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The bitcoin price has plummeted toward $90,000 per bitcoin, dragging the wider crypto market lower and wiping away around $500 billion worth of value from the $3.2 trillion crypto market.

Bitcoin’s drop of around 10% in the last 24 hours was dwarfed by ethereum and smaller, top ten cryptocurrencies—including solana and dogecoin—that crashed back by between 15% and 25%.

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ForbesBlackRock Just Quietly Confirmed A Devastating Bitcoin Price BombshellBy Billy Bambrough

This week, Federal Reserve chair Jerome Powell disappointed traders when he warned interest rates would not come down as quickly as the Fed had previously thought, reducing its planned number of cuts to just two in 2025, from four previously.

12/21 update: The bitcoin price has bounced back, climbing to within touching distance of $100,000 per bitcoin after the latest inflation data from the personal consumption expenditure (PCE) index showed a smaller than expected rise of 2.4% rise in November, just below the 2.5% estimate of economists polled by Reuters.

Other major cryptocurrencies that had crashed lower, including ethereum, Ripple’s XRP and dogecoin, also rebounded, with the combined market recovering around $300 billion of value as traders increase their bets on Federal Reserve interest rate cuts next year.

Meanwhile, Cathie Wood, the founder of the Ark Investment Management hedge fund, reiterated her bullish bitcoin price prediction in a Bloomberg interview, forecasting that the bitcoin price will top $1 million by 2030—something that would give bitcoin 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 goes up, as it has, production goes up, the rate of increase in the supply goes up—that can not happen with bitcoin.”

Over the next few weeks, bitcoin and crypto market watchers expect the bitcoin price to remain prone to wild swings.

“In terms of what is coming over the holiday period, the first rule of bitcoin is that it is always volatile in the same way water is always wet,” James Toledano, chief operating officer at Unity Wallet, said in emailed comments.

“It’s behavior is always mixed and there is zero discernible pattern at the end of the year and going into the next. Sometimes the price rises in the new year and at other times it falls. So, historically, we can say that bitcoin exhibits typically mixed behavior over Christmas and New Year,” Toledano added, pointing to incoming U.S. president Donald Trump’s January 20 inauguration as an important date to watch for the bitcoin and crypto market.

“Comments from the Federal Reserve were a wake-up call,” Danni Hewson, AJ Bell’s head of financial analysis, said in emailed comments.

“Inflation is proving sticky and tax cuts and tariffs could be a recipe for reflation. “Risk appetite has been pared back. Trump 2.0 is a known unknown and no one wants to be overexposed if the climate proves inhospitable.”

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ForbesThe Fed’s ‘Biggest Nightmare’ Is Suddenly Coming True As Bitcoin Price SurgesBy Billy Bambrough

Meanwhile, bitcoin price and crypto market watchers have warned of further volatility ahead.

“Expect to see volatility levels for both ethereum and bitcoin increase as we head into early 2025, particularly around the settlement of the December 27, 2025 expiry,” Nick Forster, founder of decentralized finance (DeFi) protocol Derive, said in emailed comments, but adding he expects the bitcoin price and wider crypto market to recover through 2025.

“We’re observing a trend where funds and high net-worth individuals are moving into options with longer expiries, like 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.”