Bitcoin Heads for First Annual Loss Since 2022 as Risk Appetite Fades

Bitcoin fell significantly by the end of 2025 and marked its first annual loss of the currency since 2022. By December 31, the cryptocurrency was at $87,474.2, which is a decrease of over 6% since the beginning of the year. 

The digital asset failed to maintain its footing against the general macro-economic headwinds, despite hitting a record high of $126,000 at the beginning of October. 

This decline is aligned with larger declines in risk assets, and analysts are also becoming more aware of the fact that Bitcoin is becoming increasingly intertwined with equity markets in the intermediate sense.

Early Highs and Sudden Plunge

During Donald Trump’s first term as President of the United States (November 2016 to November 2020), BTC surged by over 1,900%. Despite his critical stance on cryptocurrencies at the time.

The rally was supported with regulatory benefits, such as the rejection of a lawsuit by the Securities & Exchange Commission under the Biden administration of major exchanges, including Coinbase and Binance, and the passage in July of a major regulation of stable-coins. 

In addition, according to the Federal Elections Commission data, entities trading in cryptocurrencies contributed to politicians allotting $245 million in support of policy makers that were industry-friendly.

Nevertheless, the news about tariffs caused some shock to the current market atmosphere. 

The decisions made in April by the President caused a fall in the market on the whole, and the announcement of 10 October, which included the introduction of new Chinese importing duties and exporting software bans, brought with it the largest crypto-market liquidation in the history of the industry, totaling to $19 billion. 

Risk Analysis

Bitcoin is becoming more of a risky asset showing a strong level of correlation with American equities in times of tariff fears and anxiety about the artificial-intelligence sector. 

This has been pointed out by Linh Tran, a senior market analyst at XS.com, 

“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.”

In October, the cryptocurrency market experienced a 6.1% decline, marking its first red October since 2018 was consistent with equity market drawdowns as investments reexamined high valuations of AI. 

Institutional inflows into exchange-traded funds have climbed to more than $25 billion year to date but that did not prove to be enough to change the negative trend.

Looking Ahead

President Trump will create mindfulness of market structure changes, and the Securities and Exchange Commission will affect regulatory carve-outs, which will determine the direction of 2026. 

With the implementation of these reforms, analysts expect a revival of the Bitcoin valuation to the $150,000 mark in 2026, with the help of softening of policy limits and equity market sell-offs. 

However, the long-lasting tariff policies can enhance sensitivity of Bitcoin to the movements of the stock market and require advanced strategic maneuvering by investors.