Bitcoin (BTC-USD), once hailed as a "moonshot" investment, is now struggling to keep pace with even the gains of US Treasury bonds. The cryptocurrency has fallen nearly 30% from its 2025 peak, underperforming a wide range of assets, from tech stocks to short-term Treasury bills (T-bills).
As the world's largest cryptocurrency, Bitcoin was marketed as a "high-growth asset," an "inflation hedge," and a "portfolio diversifier." Yet, it now faces the possibility of ending the year in the red—with none of these purported functions materializing.
Bitcoin enthusiasts have often dismissed gold as an "outdated asset," but gold has now easily outperformed the so-called "digital gold." Amid declining interest rates and shrinking risk appetite this year, long-term bonds and the Nasdaq have also fared better than Bitcoin.
The underperformance becomes even more glaring when compared to the benchmarks Bitcoin was supposed to surpass. The MSCI Emerging Markets Index has surged this year, and even the traditionally low-volatility, low-growth, and high-stability US utilities sector has outperformed Bitcoin's decline.
On Tuesday, Bitcoin briefly dipped below $90,000—roughly the average entry price for Bitcoin exchange-traded funds (ETFs) since their launch. This means most ETF investors have been underwater, at least temporarily. By 11:46 AM New York time, the cryptocurrency had rebounded from a seven-month low, rising about 1.5% to $93,241.
For many, 2025 was supposed to be the year cryptocurrencies broke into the mainstream. A pro-crypto White House, new regulations allowing multi-token ETFs, and a wave of institutional inflows seemed to secure digital assets a place in mainstream finance. Instead, Bitcoin's 2025 trajectory has been all too familiar for investors who bought near the peak: a frenzied rally, followed by a steep drop and a gradual erosion of market confidence.
Bitcoin was positioned as everything from an inflation hedge to a growth engine and an uncorrelated store of value—yet it has recently failed on all fronts. Volatility? Still present. Reliability? Diminishing.
This is critical for professional investors. In diversified portfolios, Bitcoin has neither offset losses from tariff-induced sell-offs nor amplified gains during market rebounds. It has also failed to demonstrate independence when other markets fluctuate. For fund managers treating crypto as a "strategic allocation," the disappointment stems not just from poor performance but from the failure of its "core functions."
Opinions vary on why Bitcoin has slumped. Some blame October's "violent crash," which wiped out roughly $19 billion in leveraged positions and left deep psychological scars. "The October 10 shock had a longer-lasting impact than meets the eye," said George Mandres, senior trader at XBTO Trading. "No matter how much market participants try to forget or downplay it, it profoundly affects market makers' willingness to provide liquidity and participants' confidence and risk appetite."
Others point to broader market weakness. "Overnight Asian growth data missed expectations, Chinese equities weakened, and global tech valuations pulled back as investors reassessed ahead of Nvidia's earnings on November 19," noted Timothy Misir, head of research at digital asset analytics firm BRN. "With liquidity already tight, asset correlations have reverted to the default state of high-beta assets. In this environment, crypto isn’t a safe haven—it’s the highest-leverage expression of macro tightening."
"Discussions about an impending bear market are growing louder," said Augustine Fan, partner at SignalPlus.
Of course, Bitcoin's current price remains well above pre-Donald Trump re-election levels, and its history includes multiple "strong rebounds after crashes." Long-term returns are still impressive. But for now, traders are largely adopting defensive positions. Data from Coinbase's derivatives platform Deribit shows surging demand for downside protection at $85,000 and $80,000. Options data suggests less than a 5% chance Bitcoin will revisit its all-time high of $126,000 by year-end.
**Analyst Insight** "Bitcoin appears to be trying to reclaim its 'leader' status—only this time, as a symbol of market stability rather than stress. If the $90,000 level holds, it could mark a turning point where digital assets start driving risk sentiment higher instead of further downward."
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