On paper, 2025 should have been a banger year for Bitcoin (BTC +1.60%). Over the last 12 months, the Trump administration has supported the crypto industry with legislation and regulatory changes designed to help it break into the mainstream. Meanwhile, falling interest rates and uncertainty about the U.S. dollar create a favorable macroeconomic environment for alternative stores of value like Bitcoin. Let's dig deeper to see what the next year might have in store.
Why did Bitcoin fall this year?
CRYPTO: BTC
Key Data Points
In financial markets, good news doesn't always mean good results. That's because asset prices usually rise in anticipation of favorable future events -- only for the hype to blow off when these events happen as investors take profits and move on to new opportunities. Bitcoin's 6% decline in 2025 is a natural correction after the 125% rally it experienced in 2024.
Bitcoin's 2024 rally likely priced in many of the positive impacts of the Trump administration. These include the Securities and Exchange Commission (SEC) shifting its stance away from lawsuits and fines toward regulatory clarity. The new administration has also created a Bitcoin strategic reserve which helps legitimize the asset as a store of value, making it more palatable to risk-averse institutional investors like insurance companies, pension funds, and university endowments.
While almost 90% of Bitcoin is owned by regular retail investors, institutional ownership will be key to its sustainable success. These large organizations typically have deep pockets and long investment horizons, so their presence in the Bitcoin market will help smooth out volatility.
Uncertainty surrounds the dollar
The dollar index, which tracks the value of the U.S. currency compared to a basket of rival currencies, fell about 9% in 2025. This decline negates much of the S&P 500's return of 17% over the same time frame for foreign investors. The dollar is losing value because of increasingly erratic trade policy, concerns about central bank independence, and perhaps even falling interest rates, which can make American fixed-income assets less attractive compared to the alternatives in other countries.
As a cryptocurrency, Bitcoin operates independently of individual national economies, making it an excellent way for U.S. investors to hedge currency risk in their portfolios. The asset's early-mover advantage and brand recognition have given it a reputation as "digital gold," helping it stand out from the hundreds of other digital assets that can fill a similar role.
Image source: Getty Images.
What about actual gold and silver?
This year, precious metals like gold and silver have dramatically outperformed Bitcoin with gains of 65% and 160%, respectively. The growth in silver is most notable because it follows the Chinese government's decision to restrict exports of the essential industrial metal starting on Jan. 1, 2026. The phenomenal performance of traditional precious metals makes Bitcoin look relatively lackluster, raising the question of why buy digital gold when you can buy the real thing?
This is a fair question. But investors should remember that Bitcoin and precious metals are not necessarily rivals. And the success of one doesn't necessarily come at the expense of the other. Furthermore, over a longer-term horizon, Bitcoin has dramatically outperformed gold with a five-year gain of 205% compared to the yellow metal's increase of 124%.
Is Bitcoin a buy, sell, or hold in 2026?
The overall outlook for Bitcoin looks strong going into 2026. Even though the benefits of the Trump administration were likely already priced in by the end of 2024, the policy changes could continue to encourage more institutional investors to enter the cryptocurrency market, helping support long-term growth and reducing volatility. While Bitcoin isn't a screaming buy in 2026, it still has a place in a diversified investment portfolio.
