With a series of record highs and crushing sell-offs, 2025 has been a roller-coaster ride for bitcoin, the world’s largest cryptocurrency, which is at risk of ending the year with its first annual decline since 2022.
The world’s main stock benchmarks have also had a turbulent year, repeatedly hitting record peaks and then pulling back as worries over tariffs, interest rates and a possible AI bubble whipsawed markets. While equities are mostly up year-to-date, bitcoin’s overall correlation with share prices has strengthened markedly this year.
Analysts say bitcoin’s gyrations increasingly tracked stock market sentiment as traditional retail and institutional investors jumped into cryptocurrencies, which next year may be even more closely tethered to factors driving stocks and other risk assets, such as monetary policy shifts and nervousness over the lofty valuations of AI-related stocks.
“Crypto reacting to broader equities has been a consistent theme in 2025,” said Jasper De Maere, desk strategist at crypto algorithmic trading firm Wintermute. Bitcoin was hovering around US$89 000 on Monday.
After soaring earlier this year with the election of crypto-friendly U.S. President Donald Trump, cryptocurrencies — along with stocks — plummeted in April on his tariff announcements, but quickly rebounded. Bitcoin went on to hit an all-time peak above $126 000 in early October.
But just days later, on 10 October, the market plunged again when Trump announced a new tariff on Chinese imports and threatened export controls on critical software. That sparked more than $19-billion worth of liquidations across leveraged crypto market positions, the largest liquidation in crypto history.
Blow for bulls
Bitcoin has struggled to regain its footing ever since and in November experienced its biggest monthly drop since mid-2021, although options market bearishness has ebbed a little in recent weeks, according to options platform Derive.xyz.
Traders as of late last week had assigned a 15% probability that bitcoin will finish the year below $80 000, compared with the 20% probability they had assigned just a few weeks ago.
That’s still a blow for crypto bulls, including Michael Saylor’s Strategy, the world’s biggest bitcoin hoarding company, which had projected as recently as 30 October that the token would hit $150 000 this year. Analysts at Standard Chartered last year forecast bitcoin would hit $200 000 by the end of 2025, due in part to flows into bitcoin exchange-traded funds.
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In a change of tune, Strategy CEO Phong Le warned on a podcast last month of a possible “bitcoin winter”. In October, Standard Chartered forecast bitcoin would fall below $100 000 but said that may be the last time it will hit that low, according to media reports.
Saylor, speaking to Reuters last week, said his company could survive a 95% fall in the price of bitcoin.
Those April and October plunges highlighted the growing correlation between bitcoin and equities, and in particular, artificial intelligence stocks, which share similar attributes and have been hit by worries that valuations are in bubble territory.
Historically, bitcoin and stocks did not move in tandem because crypto was seen as an alternative investment. But with broader crypto adoption by traditional retail investors and some institutions, the correlation looks to be strengthening, analysts said.
Crypto has grown especially sensitive to AI stock moves partly because they have been drivers of broader equity markets, and partly because, like crypto, they are currently seen as somewhat speculative investments, largely dependent on investor sentiment and risk appetite, analysts said.
“Crypto was already a little weak after 10 October,” said Cosmo Jiang, a general partner at Pantera Capital, a crypto investor. “Things really started to break in risk markets in recent weeks, because of the AI bull case coming under question.”
Like stocks, cryptocurrencies also appear increasingly sensitive to the path of interest rates. Fidelity research from last year found that, while there is little historical data to indicate that the price of bitcoin increases when the Federal Reserve cuts rates, some analysts have observed that crypto tends to rally in line with dovish signals from the central bank.
Analysts also point out that hawkish Fed signals from October onwards weighed on bitcoin. Since then, the release of fresh economic data has the market pricing an 86% chance of a 25-basis-point cut this week.
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That rate decision, along with the outlook for AI stocks, will likely be a key driver for crypto prices in the near term, analysts said. — Hannah Lang, with Gertrude Chavez, Elizabeth Howcroft, Amanda Cooper and Niket Nishant, (c) 2025 Reuters
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