FY25 Wrap: Bitcoin vs the World

Bitcoin can no longer be ignored.

As it has done since inception, Bitcoin outperformed the majority of assets on an absolute basis in FY25. With a 73.2% return, it delivered more than 5x the ASX, and beat the S&P 500, gold, and most other indices. Volatile? Of course. But for the long-term investor (or Hodler), the returns have been outstanding. The volatility is a welcome feature for some as well, with BlackRock reporting their Bitcoin ETF (IBIT) earns more revenue than their flagship S&P 500 (IVV) fund.

The narrative is shifting. It’s no longer about a retail punter thinking “maybe I’ll throw in 1%.” Instead, we have institutional legitimisation via ETFs, family offices getting asked about crypto from their investors, and even executive teams pushing treasury strategy into crypto-native rails. There’s a new level of adoption – and it’s deliberate.

Volatility is still there, just less of it

The volatility remains, and it is scary for the faint of heart, but it is gradually declining.

Annualised volatility dropped to around 45-50% across FY25 and currently sits closer to 33%, well below the 100-150% levels seen in prior years. Traditional assets like Nasdaq saw roughly 20% volatility. So, although the Bitcoin ride is still a rough one, it is getting closer to some major equity indices.

Importantly, BTC's staggering 73% return gave it a stronger Sharpe ratio than most major risk assets, so risk adjusted returns were exceptional and not reckless. Continued institutional flows should continue to add stability. This may, however, limit the returns.

From fringe bet to strategic play

As above, Bitcoin (and other crypto assets) is becoming a portfolio asset for both individuals and corporates.

Among high-net-worths and SMSFs, it is a strategic diversifier, perhaps somewhere between gold and emerging markets. It's certainly not replacing core allocations, but it's getting more recognition than a throwaway 1-2% of years past.

Tariffs, gold, and the macro shake-up

Inflation, interest rates and geopolitical shocks shaped the macro landscape across FY25, and crypto was not immune.

The biggest talking point of the year from a macro lens was Trump's tariffs, which shocked risk markets and propelled gold to all-time highs in early 2025.

During this downturn BTC saw a drawdown of about 30%, significantly worse than the S&Ps 19% dip. Interestingly, as the market bottomed out in early April, Bitcoin began its rebound and showed some brief correlation with gold as both pushed towards new highs. There were even some flickers of decoupling from equities during that run. Although these patterns were short lived and not quite a regime shift.

Bitcoin remains a risk-on asset. It might flash moments of macro-hedge behaviour, but its core identity still seems tied to broader risk sentiment. However, this will be a trend to monitor in the coming years.

What’s next: Policy, products, and TradFi convergence

Policy and regulation will be key. Australia needs to embrace a formal framework and catch up to the rest of the world. The U.S. is finally stepping into a leadership role, especially around stablecoins. We’ve seen real momentum there- draft frameworks gaining bipartisan traction and the Circle IPO putting the stablecoin market front and centre. A public listing for a stablecoin issuer would’ve been unthinkable a few years ago, let alone one of Circle's massive successes. It’s a sign of how fast the industry is becoming institutional.

More ETFs, more crypto treasury companies and more tokenised products. We just had a major release of tokenised equities on-chain and retail stock darling Robinhood just released some staggering crypto products to their customers. The line between crypto and TradFi is blurring fast. Expect deeper integration and continued partnerships.

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