Bitcoin’s turbulent 2025 could end with annual loss
2025 has been a wild ride for Bitcoin, with the cryptocurrency experiencing both record highs and dramatic sell-offs throughout the year. What’s particularly notable is that Bitcoin now risks finishing the year lower than it started—something that hasn’t happened since 2022. That’s a significant shift from the pattern we’ve seen in recent years.
I think the volatility has been extraordinary, even by crypto standards. The swings have been sharp and frequent, creating a challenging environment for investors. The correlation with traditional markets has become much stronger this year, which perhaps explains some of the movement.
Political events and market correlations
The year started with optimism when Donald Trump, seen as pro-crypto, won the U.S. presidency. That gave Bitcoin a boost early on. But then things got complicated in April when new tariffs were announced. The market didn’t react well to that news.
What’s interesting is how Bitcoin recovered from that setback, actually reaching a new all-time high above $126,000 in early October. That was quite a moment for the crypto community. But the celebration was short-lived.
On October 10th, Trump announced additional tariffs on Chinese imports, and the market reacted violently. Over $19 billion was liquidated in what became the largest deleveraging event in crypto history. The scale of that move was staggering.
Traditional market connections strengthen
Analysts have been watching the growing connection between Bitcoin and stock markets. According to LSEG data, Bitcoin’s correlation with the S&P 500 averaged 0.5 through 2025, while its correlation with the NASDAQ 100 was even higher at 0.52.
That’s a meaningful shift. It suggests Bitcoin is becoming more integrated with traditional finance, for better or worse. The increased participation from institutional investors probably explains some of this correlation.
Both Bitcoin and tech stocks, particularly AI companies, seem to be viewed similarly by many investors—as speculative growth assets. When sentiment shifts in one market, it often affects the other.
Year-end expectations and rate decisions
November brought Bitcoin’s steepest monthly decline since mid-2021, which dampened year-end price expectations. Market participants currently see about a 15% chance of Bitcoin finishing below $80,000. That’s actually down from around 20% a few weeks ago, so maybe sentiment is improving slightly.
Still, it’s a disappointing picture for major investors who had much higher expectations. Michael Saylor’s firm, Strategy, had forecast $150,000 returns for the year, which now seems unlikely.
The final weeks of 2025 will likely be influenced by interest rate decisions and the performance of AI companies. There’s an 86% probability of the Federal Reserve implementing a 25 basis point rate cut this week, and those decisions could significantly impact crypto markets.
What happens next is uncertain. The connection to traditional markets means Bitcoin is subject to broader economic forces, not just crypto-specific developments. That’s a different reality than in earlier years when crypto often moved independently.
Perhaps we’re seeing Bitcoin mature as an asset class, but the growing pains are evident. The increased correlation means less isolation from stock market turbulence, which changes the risk profile for investors.
As we approach year-end, all eyes will be on the Fed’s messaging and how AI stocks perform. Those factors, combined with ongoing geopolitical developments, will likely determine whether Bitcoin can avoid its first annual decline in three years.
