Bitcoin Q4 drops -23%, the second worst in history, Ethereum worse -28%, can it turn around in January?

In Q4 2025, mainstream cryptocurrencies collectively entered a “hibernation” mode. According to the latest data, Bitcoin’s Q4 return is -23.07%, marking the second-worst quarterly performance in history, only behind the -42.16% in the same period of 2018. Ethereum performed even worse, with a Q4 return of -28.28%. Why was this Q4 so disastrous? The underlying market factors merit in-depth analysis.

How the Worst Quarter in History Came About

Data comparison reveals how severe the deviation is

According to Coinglass data, this Q4’s performance is far below the historical average:

What does this mean? To put it plainly, Q4 is usually a season of better performance for cryptocurrencies, but this year it turned out to be one of the worst quarters. BTC underperformed the historical average by 100 percentage points, and ETH’s performance is even more outrageous.

Why is it so bad

Analysis from related news highlights several key factors:

• Strengthening correlation with US stocks: Bitcoin is increasingly moving in tandem with US equities. As US stocks face pressure at year-end, it directly drags down BTC. Nasdaq futures fell 0.5%, and BTC followed suit.
• Repeated leverage in futures contracts: Every time BTC approaches $90,000, traders chase the rally by adding leverage, pushing the funding rates higher. But the price can’t stabilize; when it drops, stop-losses and forced liquidations trigger a cascade, creating what’s called a “parabolic crash”—pushing up then crashing down.
• Year-end capital settlement wave: US investors need to settle taxes and funds at year-end, so they sell quickly on slight gains. Market liquidity worsens, and declines resemble a domino effect.
• Time zone dilemma: The Asian trading session can still recover, but US trading hours get hammered again. The low-liquidity environment at year-end amplifies volatility.

Can January Reverse the Trend?

This is the most interesting part. Although Q4 performance was bleak, January’s historical performance is a bright spot.

According to Coinglass statistics, since 2016, Ethereum’s average return in January has been +20.63%, with a median of +31.92%. Over the past nine years, January has seen 5 gains and 4 losses. Bitcoin’s data is also solid—since 2013, the average January return is +3.81%, median +0.62%, with 7 gains and 6 losses over the past 13 years.

In other words, January is traditionally a “rebound month.” Especially for Ethereum, with an average gain of over 20% in January, this presents a significant recovery opportunity from the -28% in Q4.

But that doesn’t mean January will definitely rise. Historical averages are just references; the actual trend depends on:

• How US stocks perform in January
• Changes in open interest in futures contracts (which has already fallen from high levels to 662,000 BTC)
• Changes in liquidity at the start of the new year
• Any new policy actions

Summary

The poor performance in Q4 is not accidental but the result of multiple overlapping factors. US stock correlation, contract liquidations, and year-end capital flows have locked the market tight. However, based on historical patterns, January is usually a good time for a rebound. The key is whether these fundamental factors truly improve. In the short term, the market may continue to fluctuate, but in the long run, waiting for January opportunities might be wiser than chasing the downtrend in Q4.