Bitcoin set for first yearly loss since 2022 as macro trends weigh on crypto

By Hannah Lang

Dec 31 (Reuters) - Bitcoin is on track to post its first annual loss since 2022, as macroeconomic pressures and fading momentum weighed on the world's largest cryptocurrency. 

Despite reaching a fresh record high this year, bitcoin has struggled to regain its footing since October, and last month experienced its biggest monthly drop since mid-2021. Now, it is on track to end the year more than 6% lower, after posting yearly gains the previous two years. It was last trading at $87,474.2.

After soaring earlier this year with the election of crypto-friendly U.S. President Donald Trump, cryptocurrencies - along with stocks - plummeted in April on his tariff announcements. They quickly rebounded, with bitcoin hitting an all-time peak above $126,000 in early October.

But just days later, on October 10, the market plunged again when Trump announced a new tariff on Chinese imports and threatened export controls on critical software. That sparked more than $19 billion worth of liquidations across leveraged crypto market positions, the largest liquidation in crypto history.

The world's main stock benchmarks have also had a turbulent year, repeatedly hitting record peaks and then pulling back as worries over tariffs, interest rates and a possible AI bubble whipsawed markets. 

"In 2025, the market showed that bitcoin increasingly exhibits the characteristics of a risk asset within the global financial system, with a notable correlation to the U.S. equity market during multiple periods," said Linh Tran, a senior market analyst at XS.com. 

Analysts say bitcoin's gyrations in 2025 increasingly tracked stock market sentiment as traditional retail and institutional investors jumped into cryptocurrencies, which next year may be even more closely tethered to factors driving stocks and other risk assets, such as monetary policy shifts and nervousness over the lofty valuations of AI-related stocks.

Historically, bitcoin and stocks did not move in tandem because crypto was seen as an alternative investment. But with broader crypto adoption by traditional retail investors and some institutions, the correlation looks to be strengthening, analysts said.

WINS IN WASHINGTON

The crypto industry notched major regulatory wins in the U.S. under the first year of the Trump administration, including the Securities and Exchange Commission's swift move to dismiss Biden-era lawsuits against Coinbase, Binance and others, as well as the passage of a landmark law creating federal rules for dollar-pegged crypto tokens.

But crypto market structure legislation and carve-outs from SEC rules that should fix core, longstanding problems for the industry are yet to come, threatening to sap the industry's celebratory mood, according to multiple industry executives. 

Trump courted industry cash pledging to be a "crypto president," and his family's own crypto ventures have helped to propel the sector into the mainstream, say executives.

Crypto companies and executives donated more than $245 million in the 2024 election cycle to promote pro-crypto candidates including Trump, according to Federal Election Commission data.

(Reporting by Hannah Lang in New York; Editing by Chizu Nomiyama)