Bitcoin Set for First Yearly Loss Since 2022 as Macroeconomic Pressures Weigh on Crypto

Bitcoin is set to end 2025 with its first annual loss since 2022 as macroeconomic pressures and shifting investor sentiment weigh on the market. Despite hitting record highs in early October, the world's largest cryptocurrency has struggled to maintain momentum, closing the year more than 6% lower. The price recently stood at $87,474.2, marking a reversal from earlier gains.

The decline follows a year of extreme volatility. Bitcoin surged in early 2025 with optimism around pro-crypto policies under President Donald Trump, but later faltered after Trump's announcements on tariffs and export controls sparked widespread liquidations and market panic according to financial reports.

Analysts note that Bitcoin's performance in 2025 increasingly mirrors traditional risk assets like equities. The correlation has strengthened as more retail and institutional investors adopt crypto, linking its movements to broader financial market dynamics.

Why Did This Happen?

Bitcoin's price swings in 2025 were heavily influenced by Trump administration policies. After a sharp rise on pro-crypto rhetoric early in the year, the market reacted violently to Trump's tariff announcements, which triggered a $19 billion drop in leveraged positions.

Regulatory developments also played a key role. The Trump administration dismissed several Biden-era lawsuits against major exchanges like Coinbase and Binance, offering short-term relief to the industry. However, key legislation to address long-standing issues in market structure remains pending, leaving uncertainty for investors.

How Did Markets Respond?

Traditional financial markets mirrored Bitcoin's volatility. Major stock benchmarks reached record highs only to pull back as concerns over tariffs, interest rates, and the AI-driven market boom created uncertainty.

Crypto adoption by institutions also continued to rise. Regulatory clarity, including the SEC's shift to rulemaking over enforcement and the CFTC's treatment of Bitcoin and Ethereum as commodities, helped attract new capital to the space.

What Are Analysts Watching Next?

Experts are closely monitoring the regulatory landscape as the Trump administration moves to integrate digital assets into the U.S. financial system. Federal agencies have aligned on a coordinated approach to reduce legal uncertainty and expand market access for crypto firms.

Security remains a pressing concern. Despite a 51% decline in the number of hacks, 2025 saw a 46% increase in total losses, reaching $2.935 billion. DeFi platforms accounted for 63% of these attacks, while centralized exchanges like Bybit suffered massive breaches, including a $1.46 billion loss in February.

The Bybit incident underscored vulnerabilities in custody systems and led to calls for stronger global standards from the Financial Action Task Force (FATF) according to industry reports.

Investor behavior also shows a shift. Crypto wallets like Bitget are seeing increased usage for payments and earning activities, suggesting adoption is moving beyond speculative trading.

Market watchers are also eyeing new developments, including the launch of 11 new altcoin ETFs by Bitwise and the rise of AI-driven tools like KuCoin's KIA, which aim to simplify crypto trading for users .

As the year closes, the crypto market faces a crossroads. While regulatory progress supports long-term growth, near-term volatility and security risks continue to test investor confidence according to market analysis and security reports.