Bitcoin’s value is at risk of declining for the first time since 2022, following a year of record highs and significant sell-offs. The world’s main stock benchmarks have also experienced a turbulent year, with repeated record peaks and subsequent pullbacks due to concerns over tariffs, interest rates, and a potential AI bubble.
The correlation between bitcoin and stock prices has strengthened markedly in 2025, with bitcoin’s movements increasingly tracking stock market sentiment. This is attributed to the growing involvement of traditional retail and institutional investors in cryptocurrencies. Analysts predict that this correlation may become even more pronounced in the future, with factors such as monetary policy shifts and concerns over AI-related stock valuations driving both stocks and cryptocurrencies.
Bitcoin’s price has been volatile, hovering around $89,000 on Monday after hitting an all-time peak above $126,000 in early October. However, the market plummeted in April following tariff announcements by US President Donald Trump, and again in October after he announced new tariffs on Chinese imports. The cryptocurrency has struggled to regain its footing since then, experiencing its biggest monthly drop since mid-2021 in November.
The growing correlation between bitcoin and equities is evident in the data, with the average correlation between bitcoin and the S&P 500 increasing to 0.5 in 2025, compared to 0.29 in 2024. Bitcoin’s correlation with the tech-heavy NASDAQ 100 index has also strengthened, with an average correlation of 0.52 in 2025, up from 0.23 in 2024.
Analysts attribute this increased correlation to the growing adoption of cryptocurrencies by traditional investors and the speculative nature of both crypto and AI stocks. The path of interest rates is also expected to impact cryptocurrency prices, with some analysts observing that crypto tends to rally in line with dovish signals from central banks.
The upcoming interest rate decision and the outlook for AI stocks are likely to be key drivers for crypto prices in the near term. As the market awaits the Federal Reserve’s decision, analysts predict that the outcome will have a significant impact on the cryptocurrency market. With bitcoin’s price already under pressure, the next few weeks will be crucial in determining the direction of the cryptocurrency market.