Bitcoin Heads for First Annual Loss Since 2022
Bitcoin is heading toward its first annual decline since 2022, as macro pressures and fading momentum weigh on crypto markets. Although the token set fresh records earlier this year, it has struggled to recover since October. As a result, bitcoin is now on pace to finish the year more than 6 percent lower, reversing gains from the previous two years.
Volatility returns after record highs
Earlier in the year, bitcoin surged alongside broader risk assets. However, momentum faded after October, and the asset recorded its steepest monthly drop since mid-2021. Subsequently, renewed tariff announcements from Donald Trump triggered sharp sell-offs across crypto and equity markets. Moreover, additional trade measures aimed at China intensified market stress. Consequently, leveraged crypto positions saw historic liquidations, while global stock benchmarks also swung between record highs and pullbacks amid concerns over tariffs, interest rates, and stretched technology valuations.
Bitcoin moves closer to traditional risk assets
Historically, bitcoin traded independently from equities. However, broader participation by retail and institutional investors has changed that dynamic. As adoption expanded, bitcoin increasingly tracked shifts in stock market sentiment. Therefore, macro drivers such as monetary policy expectations and risk appetite now play a larger role in crypto pricing. At the same time, worries around highly valued AI-related stocks have added another layer of volatility across markets.
Regulatory progress and unresolved challenges
In Washington, the crypto sector secured notable regulatory progress during the year. For example, the U.S. Securities and Exchange Commission moved to drop several high-profile enforcement cases, including actions involving Coinbase and Binance. In addition, new federal rules for dollar-pegged tokens marked a milestone. However, broader market structure reforms remain pending. As a result, uncertainty continues to cloud longer-term confidence, even as political support and campaign funding from the crypto industry have increased its influence.
