Bitcoin Faces First Annual Loss Since 2022 Amid Market Turmoil

Bitcoin is poised to register its first annual loss since 2022, primarily due to prevailing macroeconomic pressures and diminishing momentum. As of December 31, 2025, the world’s largest cryptocurrency is projected to end the year over 6 percent lower, following two consecutive years of gains. It was trading at approximately $87,474.20 as it grapples with a significant downturn, particularly after experiencing its most substantial monthly decline since mid-2021.

This latest decline follows a year of volatility, where Bitcoin reached a record high of over $126,000 in early October. The surge was initially fueled by the election of crypto-friendly U.S. President Donald Trump and a favorable market environment. However, the optimism quickly waned following Trump’s announcement of new tariffs on Chinese imports, which led to a market plunge on October 10. This resulted in over $19 billion in liquidations across leveraged positions in the crypto market, marking the largest liquidation event in its history.

Market Correlations and Investor Sentiment

Analysts indicate that Bitcoin’s price fluctuations in 2025 increasingly mirrored stock market trends, demonstrating its evolution into a risk asset within the global financial framework. According to Linh Tran, a senior market analyst at XS.com, “Bitcoin increasingly exhibits the characteristics of a risk asset within the global financial system, with a notable correlation to the U.S. equity market.”

Historically, Bitcoin and traditional stocks did not move in sync, as cryptocurrencies were viewed as alternative investments. However, the growing adoption of cryptocurrencies by retail and institutional investors has fostered a stronger correlation, particularly as market sentiment shifts in response to monetary policy and concerns over inflated valuations in technology sectors, especially those related to artificial intelligence.

Regulatory Landscape and Industry Dynamics

The cryptocurrency industry has seen significant regulatory developments in the U.S. during Trump’s administration, including the dismissal of lawsuits against major exchanges like Coinbase and Binance. Additionally, a landmark law has been passed to establish federal rules for dollar-pegged crypto tokens. Despite these advancements, essential market structure legislation and specific exemptions from Securities and Exchange Commission (SEC) regulations are still pending, potentially dampening the industry’s momentum.

During the 2024 election cycle, crypto executives and companies contributed over $245 million to pro-crypto candidates, including Trump, reinforcing the political ties between the cryptocurrency sector and the administration. Industry leaders assert that Trump’s commitment to being a “crypto president” and his family’s ventures in the sector have propelled cryptocurrencies into the mainstream.

As Bitcoin navigates a challenging economic landscape, its relationship with traditional financial markets grows increasingly complex. Investors and analysts alike will be closely monitoring developments in both the crypto space and broader economic indicators as 2026 approaches.