Bitcoin Heads for First Annual Decline Since 2022 as Global Markets Weigh on Crypto
GeokHub
Contributing Writer
New York, Dec 31 (GeokHub) Bitcoin is poised to record its first yearly loss since 2022, as tighter financial conditions, market volatility and shifting investor sentiment weighed on the world’s largest cryptocurrency despite earlier record highs.
After surging to an all-time peak above $126,000 in October, bitcoin lost momentum in the final quarter of the year. The digital asset is now on course to end 2025 more than 6% lower, reversing gains recorded in the previous two years. It was last trading near $87,500.
The pullback followed sharp swings across global markets, as concerns over trade policy, interest rates and stretched valuations in technology stocks unsettled investors.
Tariffs and Risk Sentiment Hit Crypto Markets
Cryptocurrencies rallied earlier in the year following the election of U.S. President Donald Trump, who campaigned on a more favourable stance toward digital assets. However, that optimism faded in April when tariff announcements triggered a broad sell-off across risk assets, including crypto.
While prices rebounded and pushed bitcoin to new highs by early October, sentiment reversed again days later after fresh trade measures and export control threats rattled markets. The turbulence triggered record liquidations across leveraged crypto positions, underscoring the sector’s vulnerability to sudden policy shifts.
Bitcoin Increasingly Trades Like a Risk Asset
Market analysts say bitcoin’s performance in 2025 increasingly mirrored equity markets, reflecting deeper participation by traditional investors and institutions.
Bitcoin’s growing correlation with U.S. stocks marks a shift from its earlier reputation as an alternative asset, analysts noted, with future price movements likely to remain sensitive to monetary policy, trade tensions and broader risk appetite.
Regulatory Progress, but Gaps Remain
The crypto industry secured notable regulatory victories in Washington this year, including the dismissal of several high-profile enforcement cases and the passage of legislation establishing federal rules for dollar-backed digital tokens.
However, industry executives say key reforms addressing market structure and regulatory clarity are still pending, limiting investor confidence despite a more supportive political environment.
Trump has reiterated his ambition to position the United States as a global hub for cryptocurrencies, while industry groups significantly increased political donations during the last election cycle to support pro-crypto candidates.
