bitcoin is on track to experience its first yearly loss since 2022

As a result of increased macroeconomic headwinds and decreased market momentum, bitcoin is on track to experience its first yearly loss since 2022. The cryptocurrency has not maintained the same growth trajectory since October 2017; bitcoin had its largest monthly drop since mid-2021 last month and will be finishing the year down more than 6%. Bitcoin's last sale price was approximately $87,474.

Bitcoin was experiencing a strong uptrend earlier this year due to the election of a President who was favorable towards cryptocurrencies, but was quickly sold off in April when the newly elected President introduced a new trade tariff. Markets rebounded quickly after the sharp sell-off, and bitcoin made a new record high of greater than $126,000 in early October.

Unfortunately, bitcoin's bullish run did not last long. On October 10, Bitcoin fell sharply as the President announced additional tariffs on imports from China and threatened to impose export restrictions on some key software programs. The announcement resulted in over $19 billion worth of liquidated leveraged cryptocurrency positions, resulting in the largest liquidation event in the history of the cryptocurrency industry.

Traditional markets have also experienced a volatile year, with major stock indexes repeatedly hitting record highs before retreating amid concerns over trade tensions, interest rates and the possibility of an AI-driven asset bubble.

“In 2025, bitcoin increasingly behaved like a risk asset within the global financial system,” said Linh Tran, senior market analyst at XS.com. “Its correlation with U.S. equities became more pronounced during several periods.”

Analysts note that bitcoin’s price swings are now more closely aligned with stock market sentiment as institutional and retail investors deepen their exposure to crypto. Next year, the sensitivity of digital assets to things like monetary policy shifts and the anxiety which comes with high valuations of AI-related stocks could grow significantly, due to continued growth of digital asset adoption. Bitcoin has traditionally been viewed as a non-correlated asset, but over the last several months, bitcoin's value has began to correlate with traditional risk assets more closely.

Regulatory gains in Washington
The crypto sector scored several regulatory victories in the U.S. during the first year of the Trump administration. These included the Securities and Exchange Commission’s decision to drop Biden-era lawsuits against firms such as Coinbase and Binance, as well as the passage of landmark legislation establishing federal rules for dollar-pegged digital tokens.

However, industry executives caution that broader market-structure reforms and exemptions from certain SEC rules seen as critical to resolving long-standing issues have yet to materialize, potentially tempering optimism.

Trump’s pledge to be a “crypto president,” coupled with his family’s own ventures in the space, has helped push the industry further into the mainstream. Crypto companies and executives donated more than $245 million during the 2024 election cycle to support pro-crypto candidates, including Trump, according to federal election data.