2025 concluded with the so-called “Great Bitcoin Crash of 2025,” a period in which the main cryptocurrency experienced a significant loss, leading it to close the fiscal year with a Year-to-Date (YTD) annual return of -1.2%. This figure sharply contrasts with the upward trend observed in almost all other asset classes. Data collected by The Economic Times indicates that Bitcoin fell close to 30% from its 2025 peak.
The asset market divergence was the central theme of 2025, as Bitcoin performance was the only one in negative territory compared to major indices and commodities. On the other hand, global equities showed solid growth, with the Nasdaq 100 and S&P 500 recording advances of 15.5% and 14.7%, respectively. Likewise, emerging markets rose by 8.6% and small caps by 8.4%, underscoring a broad rally.
For its part, gold proved to be the star investment, posting a massive rally of 55.2% for the year, and long-term bonds also offered a positive return of 2.9%. In addition, this pattern of massive increases in traditional assets makes the cryptocurrency’s closing at -1.2% in Bitcoin performance a notable anomaly, not seen since 2011. This atypical behavior in Bitcoin performance forced treasury managers and traders to re-examine their strategies regarding correlations and portfolio protection.
In particular, the narrative of Bitcoin as an inflation hedge was questioned, as its performance did not provide the defensive character many had expected. Consequently, the cryptocurrency did not function as a counterweight in the portfolio by aligning itself with the downward movement of other risk assets.
Is the “Digital Gold” Myth Sustained Despite its Correlation with Stocks?
An analysis conducted by DIW Berlin, and cited by Statista, indicates that Bitcoin has exhibited a high correlation with equity returns since 2015, so it acts more as an appendage of the stock market than as an independent refuge. Conversely, the blockchain behind Bitcoin is a technological milestone, but its financial utility as a safe-haven asset is still under debate.
The contrast with gold is significant, as the precious metal historically exhibits a slightly negative correlation with the S&P 500, behaving as a natural hedge against risk aversion. This fundamental difference is what explains why gold widely surpassed Bitcoin in 2025 and the reason why institutional investors took refuge in more proven assets again.
The poor Bitcoin performance throughout 2025 has direct consequences for various market participants. Thus, for derivatives traders, the high correlation with stocks forces a modification of the competition between leverage and hedging strategies in futures and perpetuals.
Likewise, companies that use Bitcoin as a store of value must review their exposure limits and liquidity plans, especially after the recent volatility. This episode marks an obligatory revision of assumptions, as the cryptocurrency has lagged behind bonds, gold, and stocks. The “Great Bitcoin Crash of 2025” label calls into question its role as a diversification and refuge tool.
Market attention now turns to the next quarterly data on flows and correlations, which will confirm whether this pattern is a transient event or the beginning of a structural reallocation of assets, with a view to establishing new projections for Bitcoin performance in the near future.
