Here’s Why Bitcoin Tanked Below $100,000 and XRP Slid Below $2.3

Over the past 24 hours, the crypto market has experienced significant turbulence, with the slump in Bitcoin price triggering a crash for altcoins like XRP.

After recently rallying to new highs above the $108,000 price point, Bitcoin (BTC) saw a sharp decline to below the $100,000 price point, dragging leading altcoins such as XRP down with it. The sharp and largely unexpected decline has left the market grasping for answers.

Hawkish Fed to Blame? 

In the last 24 hours, BTC dropped as much as 7.2% from highs of over $106,500 to lows around the $98,800 price point on Binance.

Moving in lockstep with the market leader, Ethereum (ETH) recorded an over 9% decline from around the $3,900 price point to just above $3,500. Similarly, XRP tanked 19% from near the $2.6 price point to about $2.2.

At the same time, Solana (SOL) slid by nearly 12% from about $226 to just below the $200 price point. Notably, these declines have led to over $800 million in market liquidations, per CoinGlass data at the time of writing.

As several analysts have highlighted, the crypto market’s decline on Wednesday, December 18, appears to be linked to Federal Reserve Chair Jerome Powell’s speech following the December 2024 Federal Open Market Committee (FOMC) meeting.

While the Fed cut rates by 25 basis points to the 4.25-4.5% as expected, Powell rattled the markets with statements suggesting that the apex bank’s fight with inflation was far from over and interest rates were now likely to remain higher for longer. 

Powell disclosed that the most recent 25 bps rate cut was a “closer call” against market expectations heading into the FOMC that it was a certainty.

The Fed now expects to see inflation at 2.5% in 2025, up 0.4% from its initial 2.1% projection in September 2024 and much higher than its 2% target.

As such, the central bank now looks to only cut lending rates by two-quarter points in 2025, down from the initially projected four, all of which could slow the influx of capital to risk markets like crypto.

“It wasn’t today’s 25 bps cut that made markets freak out—it was the realization that inflation might stick around longer, and the Fed’s not quite ready to take its foot off the gas. Sentiment is shifting, and 2025 suddenly looks a lot less rosy,” prominent crypto analyst Ali Martinez explained on X.

Meanwhile, Powell also scuttled hopes that the Donald Trump administration would launch a Bitcoin national reserve. The Fed chair contended that the law did not allow the central bank to hold the digital asset, adding that the bank was not looking to change the law.

Markets Ticking Up

Following the initial knee-jerk reaction, some crypto assets have started paring losses. BTC, for one, is back above the $100,000 price level, trading near the $101,300 price point but still down about 5% from its Wednesday highs. ETH has also recovered to trade at nearly around the $3,700 price point, while XRP trades close to $2.35.

While 2025 may now look less exciting for risk markets than previously expected, analysts like Ali Martinez maintain that investors should bid their time and not panic sell.