Bitcoin's 2025 rollercoaster may end on a low
In a change of tune, Strategy CEO Phong Le warned on a podcast last month of a possible "bitcoin winter." In October, Standard Chartered forecast bitcoin would fall below $100,000 but said that may be the last time it will hit that low, according to media reports.
Saylor, speaking to Reuters last week, said his company could survive a 95% fall in the price of bitcoin.
EQUITIES CORRELATION
Those April and October plunges highlighted the growing correlation between bitcoin and equities, and in particular, artificial intelligence stocks, which share similar attributes and have been hit by worries that valuations are in bubble territory.
Historically, bitcoin and stocks did not move in tandem because crypto was seen as an alternative investment. But with broader crypto adoption by traditional retail investors and some institutions, the correlation looks to be strengthening, analysts said.
Correlation is measured from -1 to 1, with figures above zero indicating a positive correlation. In 2025, the average correlation between bitcoin and the S&P 500 - which tracks a broad basket of companies - was 0.5, compared with an average correlation in 2024 of 0.29, LSEG data shows.
For the tech-heavy NASDAQ 100 index, the average correlation this year was 0.52, compared with 0.23 in 2024, according to LSEG data.
Crypto has grown especially sensitive to AI stock moves partly because they have been drivers of broader equity markets, and partly because, like crypto, they are currently seen as somewhat speculative investments, largely dependent on investor sentiment and risk appetite, analysts said.
"Crypto (was) already a little weak after October 10," said Cosmo Jiang, a general partner at Pantera Capital, a crypto investor. "Things really started to break in risk markets in the recent weeks, because of the AI bull case coming under question."
RATE CUT QUESTIONS
Like stocks, cryptocurrencies also appear increasingly sensitive to the path of interest rates. Fidelity research from last year found that, while there is little historical data to indicate that the price of bitcoin increases when the Federal Reserve cuts rates, some analysts have observed that crypto tends to rally in line with dovish signals from the central bank.
Analysts also point out that hawkish Fed signals from October onwards weighed on bitcoin. Since then, the release of fresh economic data has the market pricing an 86% chance of a 25-basis-point cut this week.
That rate decision, along with the outlook for AI stocks, will likely be a key driver for crypto prices in the near term, analysts said.
"The Fed's support of monetary supply in this particular scenario is going to be an indicator that crypto is all looking at," said Mo Shaikh, co-founder and general partner at Maximum Frequency Ventures.
(Reporting by Hannah Lang in New York; Additional reporting by Gertrude Chavez, Elizabeth Howcroft, Amanda Cooper, and Niket Nishant; Editing by Michelle Price and Edmund Klamann)
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