Bitcoin Faces First Annual Decline Since 2022 Amid Market Volatility
Bitcoin is on track to record its first annual loss in four years, as global economic pressures and waning investor confidence weighed on the world’s largest cryptocurrency. Despite setting a new all-time high earlier in 2025, the digital asset has struggled to maintain momentum and is now poised to close the year down more than 6 percent. At last check, bitcoin was trading at $87,474.2.
From Record Highs to Market Turbulence
Bitcoin’s performance this year has mirrored broader market instability. The cryptocurrency surged earlier in the year following the election of crypto-friendly U.S. President Donald Trump, with optimism around regulatory easing and market expansion driving prices higher. In early October, bitcoin touched a record peak above $126,000 before rapidly reversing course.
The downturn began on October 10, when Trump announced new tariffs on Chinese imports and threatened export controls on critical software. The announcement triggered the largest liquidation event in crypto history, wiping out more than $19 billion in leveraged positions and sending digital assets and global equities sharply lower.
Markets have since struggled to stabilise. While bitcoin briefly recovered, its late-year losses echo broader weakness in stock markets, which have swung wildly amid concerns over tariffs, interest rates, and an overheated artificial intelligence sector.
Bitcoin’s Growing Correlation with Risk Assets
“Throughout 2025, the market showed that bitcoin increasingly exhibits the characteristics of a risk asset within the global financial system, with a notable correlation to the U.S. equity market during multiple periods,” said Linh Tran, senior market analyst at XS.com.
Analysts note that bitcoin’s price movements now more closely track equity sentiment, reflecting the influx of traditional investors into the crypto market. This growing alignment suggests that factors such as central bank policy shifts and market volatility in technology stocks could play an even greater role in shaping crypto performance next year. Historically, cryptocurrencies traded independently of equities, but expanding adoption has tightened the connection between the two.
Policy Gains and Political Support in Washington
The crypto industry secured several major regulatory victories in the United States during Trump’s first year in office. The Securities and Exchange Commission swiftly dropped lawsuits filed during the Biden administration against major exchanges including Coinbase and Binance. In addition, Congress passed a landmark law establishing federal oversight for dollar-pegged stablecoins.
However, further reforms aimed at improving market structure and clarifying regulatory boundaries remain pending, tempering industry optimism. Despite this, Trump’s vocal support for digital assets and his family’s direct involvement in crypto ventures have helped mainstream the sector.
According to Federal Election Commission data, crypto firms and executives contributed more than $245 million to pro-crypto candidates, including Trump, during the 2024 election cycle, cementing the industry’s growing political influence.
with inputs from Reuters
