The Northeastern United States wasn’t the only region hit by the harsh cold this month – a new winter has also hit the cryptocurrency market. Weak sentiment and choppy trading put Bitcoin at risk of its worst annual performance since 2022. What’s Causing Cryptocurrencies to Stall in 2025, and Can Investors Expect a Brighter Year in 2026?
Below, we’ll explore why digital assets are headed for a decline in 2025, and name two crypto-related companies you might want to stay away from until Bitcoin reverses its momentum.
Crypto lags most asset classes in 2025
Cryptocurrencies entered the year with plenty of momentum, but the strong bullish sentiment was diminished as Bitcoin’s price declined. Following the 2024 US presidential election, Bitcoin rose from $70,000 per token to over $120,000 amid anticipation of a friendlier regulatory environment and increased risk-taking among investors. We’ve seen more risk-taking by investors (look at all the dips bought this year!), but the friendlier regulatory environment has not materialized as Bitcoin bulls had hoped.
The Trump administration has relaxed some regulations on cryptocurrency trading, but the main regulatory focus remains uncertain. The US House of Representatives passed the Clarity Act last summer to establish clearer rules for digital assets. However, the bill is unlikely to pass through the Senate as currently envisioned, and draft amendments are underway on both sides of the aisle. The Senate is expected to vote in 2026, but no specific date has been set.
US regulators are the only concern of the crypto market. Although the current government is more open to digital assets than previous administrations, the same cannot be said for other world leaders. Like some Asian regulators, the EU has tightened surveillance on crypto exchanges and stablecoins.
And of course, cryptocurrency mining and trading is completely banned in China. The cryptocurrency was becoming a proxy for the broader tech sector, moving in line with risk assets like AI stocks. However, the chart above shows that the correlation has broken down, and Bitcoin is now outperforming not only stocks but also commodities and bonds.
2 stocks to avoid crypto market disruption
With the launch of Bitcoin and Ethereum ETFs, investors now have easy access to major cryptocurrencies through traditional channels. As a result, stocks that were once valued for their crypto exposure – like miners and treasury-heavy companies – are losing investor interest.
Two stocks are particularly vulnerable in the current environment. Both have significant crypto exposure, and their recent moves suggest rising financial and technical risks.
Sharplink Gaming: Overvaluation and liquidity concerns
Sharplink Gaming Inc. (NASDAQ:SBET) made headlines earlier this year when the small gaming and advertising company pivoted completely into crypto.
After appointing Ethereum co-founder Joseph Lubin to the C-suite, SBET doubled down by converting the company to Ethereum treasury, buying over $3 billion in ETH tokens and staking almost all of them to earn yield.
The resulting yield has generated record revenues, but the company’s future is now completely tied to the price of Ethereum.
If regulators deem the ETH token a security next year, Sharplink could be forced to register as an investment company, which would lead to significant compliance costs and a change in business model.
The stock is also facing pressure from valuation and technical problems. Despite record revenue, the company still suffered a loss of 63 cents per share in Q3 2025, and the stock is still heavily overvalued despite recent declines. The Moving Average Convergence Divergence (MACD) indicator recently made a bearish crossover, signaling that another burst of downside momentum could hit the stock soon.
TerraWulf: Credit risk is becoming a burden
Terawolf Inc. (NASDAQ:WULF) has a noble goal: to become the first carbon-neutral cryptocurrency miner. One of its facilities, Project Nautilus, runs entirely on hydroelectric power from New York.
TeraWulf also provides high-performance computing (HPC) solutions to data centers, and this combination of revenue sources has driven WULF shares to a 120% year-to-date (YTD) performance.
But the company’s rapid expansion was mostly debt-driven, and now, debt issues are cropping up.
TerraWulf had approximately $5 billion in debt financing agreements due in 2025, with its total debt now exceeding $1.5 billion. Analysts warn that this debt load could become unmanageable as costs rise and liabilities outpace the company’s assets.
Fundamental weakness has dominated the charts, and now technical hurdles threaten to bring the stock down from its highs. A key support area on the 50-day simple moving average (SMA) has been broken, and this break was confirmed with a bearish crossover on the MACD. While Terawolf no longer relies solely on Bitcoin for income, a further decline in BTC could put severe pressure on the company’s growing debt crisis.
You’ll want to hear this before you make your next trade.
MarketBeat tracks Wall Street’s top-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified five stocks that top analysts are quietly telling their clients to buy now before the broader market takes over… and no big-name stocks were on the list.
He believes these five stocks are the five best companies for investors to buy right now…
Check out five stocks here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Reflect the views of.
