NEW YORK / LONDON (IT BOLTWISE) – Bitcoin experienced a turbulent year in 2025, marked by record highs and dramatic crashes. The cryptocurrency faces the possibility of ending the year with a loss, which would be the first time since 2022. The correlation between Bitcoin and the stock market has increased as investors increasingly invest in cryptocurrencies.
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In 2025, Bitcoin has experienced a roller coaster ride that has kept both investors and analysts on the edge of their seats. The cryptocurrency, considered the largest in the world, has seen both record highs and dramatic crashes this year. This volatility has raised the possibility that Bitcoin could end the year with a loss, which would be the first time since 2022.
A key factor in Bitcoin’s fluctuations has been its increasing correlation with stock markets. This connection has strengthened over the year as both traditional and institutional investors have invested in cryptocurrencies. This development could become even more pronounced next year as factors such as monetary policy changes and uncertainty about the high valuations of AI-related stocks come into play.
The election of crypto-friendly US President Donald Trump earlier this year led to a surge in cryptocurrencies. But the announcement of new tariffs on Chinese imports in October triggered a massive sell-off that led to over $19 billion worth of liquidations. This was the largest liquidation in cryptocurrency history and has left Bitcoin struggling to recover ever since.
Analysts have observed that the correlation between Bitcoin and the stock markets, especially AI stocks, has increased. These stocks share similar characteristics and are affected by concerns about excessive valuations. Historically, Bitcoin and stocks have not moved in lockstep as cryptocurrencies have been viewed as alternative investments. But with the wider acceptance of cryptocurrencies by traditional investors, this correlation appears to be strengthening.
The US Federal Reserve’s interest rate policy also has an impact on Bitcoin. While there is little historical data to suggest that Bitcoin price rises when the Federal Reserve cuts interest rates, some analysts have observed cryptocurrencies rising in line with dovish signals from the central bank. Recent economic data suggests a high probability of a rate cut, which could be a crucial factor in the short-term price movement of cryptocurrencies.
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