Dec 9 (Reuters) – With a series of records and sell-offs, 2025 has been a roller coaster year for bitcoin, the world’s largest cryptocurrency, which is likely to end the year with its first annual decline since 2022.
The world’s major stock indexes also had a turbulent year, repeatedly hitting record highs and then retreating as concerns over tariffs, interest rates and a possible AI bubble roiled markets. While stocks are mostly up year-to-date, bitcoin’s overall correlation with stock prices has strengthened significantly this year.
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Analysts say Bitcoin’s swings have increasingly tracked stock market sentiment as traditional retail and institutional investors have jumped into cryptocurrencies, which could be even more closely tied next year to factors that drive stocks and other risky assets, such as changes in monetary policy and nervousness over high AI-related stock valuations.
“The reaction of cryptocurrencies to broader actions has been a consistent theme in 2025,” said Jasper De Maere, desk strategist at crypto algorithmic trading firm Wintermute.
Bitcoin was hovering around $89,000 on Monday.
Most popular cryptocurrency collapses after hitting all-time highs earlier this year
After soaring earlier this year with the election of crypto-friendly US President Donald Trump, cryptocurrencies – along with stocks – fell in April following his tariff announcements, but quickly rebounded. Bitcoin hit an all-time high above $126,000 in early October.
But a few days later, on October 10, the market plunged again when Trump announced new tariffs on Chinese imports and threatened export controls on critical software. This triggered over $19 billion in liquidations on leveraged crypto market positions, the largest liquidation in crypto history.
Since then, Bitcoin has struggled to regain its footing and in November saw its biggest monthly decline since mid-2021, although the decline in the options market has eased somewhat in recent weeks, according to options platform Derive.xyz.
At the end of last week, traders had assigned a 15% probability that Bitcoin would end the year below $80,000, up from the 20% probability they had assigned just a few weeks ago.
It’s still a blow to crypto traders, including Michael Saylor’s Strategy, the world’s largest Bitcoin hoarding company, which predicted as recently as Oct. 30 that the token would hit $150,000 this year. Last year, analysts at Standard Chartered predicted that Bitcoin would reach $200,000 by the end of 2025, driven in part by flows into Bitcoin exchange-traded funds.
In a change of tone, Strategy CEO Phong Le warned in a podcast last month of a possible “Bitcoin winter.” In October, Standard Chartered predicted bitcoin would fall below $100,000, but said this may be the last time it hits that low, according to media reports.
Saylor, speaking to Reuters last week, said his company could survive a 95% drop in the price of bitcoin.
ACTION CORRELATION
These April and October falls highlighted the growing correlation between bitcoin and stocks, and particularly artificial intelligence stocks, which share similar attributes and have been hit by fears that valuations are in bubble territory.
Historically, bitcoin and stocks have not moved in tandem because cryptocurrencies were viewed as an alternative investment. But with broader adoption of crypto by traditional retail investors and some institutions, the correlation appears to be strengthening, analysts said.
Correlation is measured from -1 to 1, with numbers greater than zero indicating a positive correlation. In 2025, the average correlation between bitcoin and the S&P 500 (.SPX)open a new tab – which tracks a broad basket of companies – was 0.5, compared to an average correlation in 2024 of 0.29, according to LSEG data.
Bitcoin’s correlation with the S&P 500 on a one-month rolling basis has remained above zero for most of 2025. Correlation is measured from -1 to 1, with anything above zero being positive.
For the NASDAQ 100 index (.NDX), with a strong technological componentopen a new tabthe average correlation this year was 0.52, compared to 0.23 in 2024, according to LSEG data.
Cryptocurrencies have become particularly sensitive to movements in AI stocks, partly because they have been drivers of broader stock markets and partly because, like cryptocurrencies, they are currently considered somewhat speculative investments, largely dependent on investor sentiment and their appetite for risk, analysts said.
“Crypto (was) already a little weak after October 10,” said Cosmo Jiang, general partner at Pantera Capital, a crypto investor. “Things have really started to deteriorate in risk markets in recent weeks, as the AI bull case is being called into question.”
QUESTIONS ABOUT THE RATE CUT
Like stocks, cryptocurrencies also appear increasingly sensitive to changes in interest rates. A Fidelity study from last year found that while there is little historical data indicating that the price of bitcoin rises when the Federal Reserve cuts rates, some analysts have observed that the crypto tends to rally in line with dovish signals from the central bank.
Analysts also point out that the Fed’s hawkish signals from October weighed on bitcoin. Since then, the release of new economic data gives the market an 86% chance of a 25 basis point decline this week.
This rate decision, along with the outlook for AI stocks, will likely be a key driver of crypto prices in the near term, analysts said.
“The Fed’s support for monetary supply in this particular scenario will be an indicator that all cryptocurrencies will look at,” said Mo Shaikh, co-founder and general partner of Maximum Frequency Ventures.
Reporting by Hannah Lang in New York; Additional reporting by Gertrude Chavez, Elizabeth Howcroft, Amanda Cooper and Niket Nishant; Editing by Michelle Price and Edmund Klamann
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Hannah Lang covers financial technology and cryptocurrency, including the companies driving the industry and the political developments governing the sector. Hannah previously worked at American Banker where she covered banking and Federal Reserve regulation. She is a graduate of the University of Maryland, College Park and lives in Washington, DC.
