2025 has been an extremely volatile year for Bitcoin, with record highs and sharp sell-offs intertwined. The world’s largest crypto asset is at risk of ending the year in decline for the first time since 2022 due to the sharp fluctuations it experienced throughout the year.
Bitcoin’s 2025 Surge Could End in a Year-End Drop
Global stock indices have similarly fluctuated due to market concerns about tariffs, interest rates and artificial intelligence.
Analysts say the correlation between Bitcoin and the equity markets has strengthened significantly this year, with the crypto asset now much more responsive to macro developments.
Bitcoin’s rally in early 2025 accelerated with the election of pro-crypto US President Donald Trump. However, new tariffs announced in April severely shook both crypto markets and stocks.
Bitcoin subsequently recovered, reaching an all-time high above $126,000 in early October. However, the market crashed again on October 10th when Trump announced new tariffs on Chinese imports, triggering a deleveraging of over $19 billion. This became the largest such liquidation in crypto history.
Bitcoin experienced its steepest monthly decline since mid-2021 in November, while investors’ year-end price expectations also weakened. Market participants still see a 15% chance of Bitcoin ending the year below $80,000.
That ratio was around 20% a few weeks ago. This is a depressing picture for major investors like Michael Saylor’s firm, Strategy, which forecast $150,000 in returns for the year.
Experts believe that Bitcoin’s synchronization with stocks, especially AI companies, is primarily due to increased traditional investor participation and the speculative perception of both asset classes. According to LSEG data, the correlation between Bitcoin and the S&P 500 rose to an average of 0.5 through 2025, while the correlation with the NASDAQ 100 stood at 0.52.
Analysts say that interest rate cut expectations and the trajectory of artificial intelligence companies will determine Bitcoin’s price in the final weeks of the year. With an 86% probability of the US Federal Reserve implementing a 25 basis point rate cut this week, the Fed’s messages are expected to largely determine the direction of crypto markets.
*This is not investment advice.