December 24, 2025 – Bitcoin price fluctuations in 2025 may not have been predicted, but they had a predictable impact on market behavior. When asset prices fall, disputes often arise over the distribution of losses; conversely, during periods of rising asset prices, competition intensifies and the potential risks associated with inappropriate conduct also increase. Add to that the government’s withdrawal from regulation and enforcement, and it’s up to private litigation to fill in the gaps to keep the market on course. Litigation risks, in turn, further define market dynamics.
This is the story of Bitcoin in 2025.
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The rise and fall
Bitcoin’s rise to $126,000 in October 2025 marked a defining moment for digital assets, setting a new all-time high before reminding investors how quickly momentum can reverse. This rise has not occurred in isolation, but through a convergence of unique factors, including institutional electronic funds transfer (EFT) flows, reduced supply (thanks to the latest “halving”), and macroeconomic conditions (e.g., low interest rates), which have made risky assets, such as cryptocurrencies, more attractive.
By late November and early December, Bitcoin had fallen back to around the mid-$80,000s. Such a decline may have seemed dramatic, but history shows that it was far from unusual. See “Bitcoin down nearly 30% from all-time high — history shows that’s normal,” CNBC, December 4, 2025. In previous cycles, including 2017 and 2021, Bitcoin underwent several 30-50% corrections before resuming its advance, a pattern that the current cycle echoes. See “Bitcoin down almost 30% from all-time high – history shows this is normal,” CNBC, 2025.
This development reflects broader deleveraging (investors repaying borrowed money and reducing risky positions) and a cooling of flows. In early December, prices stabilized between $92,500 and $93,000. See “2025 Year-End Review of the Cryptocurrency Market,” Nasdaq, December 5, 2025.
In the flow: ETFs move from tailwind to tailwind
A spot cryptocurrency ETF is an exchange-traded fund that directly holds the underlying digital asset, such as Bitcoin, at its current market price. It provides investors with regulated stock market access to real crypto exposure without the need to manage wallets or private keys.
ETFs helped fuel the rally earlier in the year, but when sentiment changed, they also became a quick exit route. BlackRock’s IBIT ETF alone saw outflows of about $2.7 billion over five weeks through the end of November, demonstrating how quickly ETF flows can reverse and put pressure on prices. See “BlackRock Bitcoin ETF Loses $2.7 Billion in Record Outflows,” Bloomberg, December 5, 2025.
Returns: a macro headwind reappears
At the Federal Reserve’s December meeting, U.S. Treasury yields were near recent highs, with the 10-year around 4.17% and the 30-year near 4.82%, as investors awaited policy guidance. See “U.S. Treasury Yields Hit Multi-Month Highs as Focus Turns to the Fed,” Bloomberg, December 8, 2025.
When Treasury yields rise, yield-free and momentum-sensitive assets like Bitcoin and related ETFs may become less attractive, as investors can earn safer returns through bonds and other interest-bearing investments. This macroeconomic backdrop likely worsened ETF outflows and added to overall price pressure.
Setting the Standard: The MiCA Transition
Regulation matured in 2025, notably in the EU under the Markets in Crypto-Assets Regulator (MiCA), the EU’s first comprehensive framework for digital assets, designed to harmonize rules across member states and bring greater transparency, consumer protection and market integrity to the sector. Although its phased implementation began in 2024, the transitional measures extend the compliance deadline until 2026. See “ESMA Statement on MiCA Transitional Measures”, ESMA, December 17, 2024.
This transition increases compliance costs in the short term, but it improves market trust and integrity in the long term. By setting the standard for comprehensive crypto oversight, MiCA served as the catalyst for the GENIUS Act in the United States, which aims to govern payment stablecoins outside the jurisdiction of the Securities and Exchange Commission. The hope is that harmonized rules will stabilize the crypto market and strengthen consumer protection.
The rise of private litigation in 2025
SEC enforcement has apparently been significantly reduced under the Trump administration, with notable dismissals of actions against Binance, Coinbase, and Ripple, and the agency bringing fewer new enforcement actions than it has historically filed.
As investors and insiders fill enforcement gaps left by regulators, companies must strengthen disclosure, tighten governance and develop dispute resolution frameworks that can withstand scrutiny from multiple angles. The cost of making a mistake in 2025 was measured in settlement amounts and significant legal fees. Two trends to watch out for are investor class action lawsuits and misrepresentations related to marketing and influencers.
Investor class actions
False marketing claims and influencer promotions became fertile ground for private fraud lawsuits in 2025. Investors sued Unicoin for allegedly misrepresenting the nature of its Unicoin rights certificates, including claiming that the tokens would be asset-backed, registered with the SEC, and backed by billions of dollars in real estate, when, according to the complaint, the assets were worth only a fraction of what was publicly touted. The pleading also alleges inflated sales figures and misleading marketing materials distributed through investor updates, social media and paid promotions. A response has so far been submitted since it is expected in February 2026.
The rise of influencer-driven token promotions added another level of complexity, as companies were held accountable not only for their own statements, but also for claims made by third-party promoters. The bottom line is that every public statement and influencer partnership is potential evidence. Legal and compliance teams should review marketing materials with the same rigor applied to securities filings, or risk, as investors.
Parallel actions
The Gemini litigation illustrates how the collapse of a financial product can quickly give rise to investor class actions alleging unregistered securities offerings and misrepresentation of risk. Investors claim that Gemini misrepresented the security, liquidity and counterparty exposure of the Earn program, particularly its reliance on Genesis Global Capital, which subsequently froze withdrawals and went bankrupt. Gemini has denied any wrongdoing.
The matter remains suspended in Federal Court after being referred to arbitration. Similarly, the parties to the parallel SEC lawsuit sought to indefinitely suspend all litigation deadlines in hopes of reaching a resolution.
Although the class action began in 2022, during a period of heavier regulatory action, it remained active and increasingly influential during a year of reduced federal enforcement, illustrating how landmark litigation filed in previous years continued to shape legal risk and market behavior in 2025. Even as new regulatory action slowed, private suits like Gemini Earn continued to advance, albeit in arbitration, creating sustained pressure regardless of political or regulatory changes.
Looking towards 2026
2026 should be a year of consolidation and structural progress rather than a year of explosive price action. The foundations laid in 2025 should make the market more resilient, although volatility remains part of the problem. ETF flows will remain a double-edged sword. The same mechanisms that fueled the rally in 2025 can just as quickly accelerate sales when sentiment reverses.
From a legal perspective, 2026 is expected to mark the shift from regulatory uncertainty to litigation enforcement. As U.S. courts continue to close regulatory loopholes, crypto companies will operate in a more rules-based, but less forgiving, environment in which compliance failures quickly result in lawsuits, injunctions, and exclusion from the market.
The risk of private litigation in crypto is no longer an ancillary but rather a central element of the legal landscape. In 2026, the companies that survive and thrive will be those that take legal risk management as seriously as technology development.
Joseph Cioffi is a regular columnist on consumer and commercial finance for Reuters Legal News and Westlaw Today.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.
