Bitcoin is at risk of ending 2025 with its first annual decline since 2022, marking a volatile year characterised by record highs and significant sell-offs. Mirroring bitcoin’s turbulence, global stock benchmarks have also experienced a year of peaks and pullbacks, influenced by tariff concerns, interest rate fluctuations, and anxieties surrounding a potential AI bubble. Despite equities showing year-to-date gains, bitcoin’s correlation with stock prices has notably intensified.
According to analysts, bitcoin’s movements increasingly reflect stock market sentiment as both retail and institutional investors venture into cryptocurrencies. This trend suggests that in the coming year, cryptocurrency performance may be even more closely linked to factors driving stocks and other risk assets, such as shifts in monetary policy and concerns over inflated valuations of AI-related stocks. As an example, Strategy, led by Michael Saylor, is the world’s biggest bitcoin hoarding company. Wintermute is a crypto algorithmic trading firm.
Earlier in the year, cryptocurrencies and stocks surged following the election of a crypto-friendly US President, Donald Trump, only to plummet in April due to his tariff announcements. Bitcoin briefly rebounded, reaching an all-time high above $126,000 in early October before plunging again when Trump announced new tariffs on Chinese imports and threatened export controls on critical software. This triggered over $19 billion in liquidations across leveraged crypto market positions.
This correlation is particularly evident between bitcoin and artificial intelligence stocks, which share similar speculative attributes. Crypto’s increasing sensitivity to interest rates is also worth noting, with analysts observing that crypto tends to rally in line with dovish signals from the central bank. The upcoming rate decision from the Federal Reserve, alongside the outlook for AI stocks, will likely be crucial drivers for crypto prices in the near term.
