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2 Stocks to Avoid as Crypto Momentum Wanes
Submitted by Dan Schmidt. Article Published: 12/21/2025.
Quick Look
- Bitcoin and other major cryptocurrencies continue to lag other asset classes and indices as 2025 comes to a close.
- Despite a friendly administration and investor risk-on behavior, cryptocurrency markets have been stymied by a lack of clear regulation from U.S. lawmakers.
- Crypto-linked stocks like SharpLink Gaming and TeraWulf face valuation and debt risks as digital asset momentum fades.
The northeast United States wasn't the only region gripped by bitter cold this month—a new winter has also hit the cryptocurrency market. Weak sentiment and choppy trading threaten Bitcoin with its worst yearly performance since 2022. What has caused the cryptocurrency stall in 2025, and can investors hope for a brighter 2026?
Below, we'll explore why digital assets have floundered in 2025 and highlight two crypto-related companies you may want to avoid until Bitcoin reverses course.
Crypto Has Lagged Most Asset Classes in 2025
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Cryptocurrencies entered the year with plenty of momentum, but bullish sentiment faded as Bitcoin's price wobbled. After the 2024 U.S. presidential election, Bitcoin surged from roughly $70,000 to over $120,000 amid expectations of a friendlier regulatory environment and greater investor risk-taking. Investors did step up risk-taking—many dips were bought this year—but the anticipated regulatory clarity hasn't materialized in the way Bitcoin bulls hoped.
The Trump administration eased some rules on cryptocurrency trading, but the broader regulatory picture remains uncertain. The U.S. House of Representatives passed the Clarity Act last summer to establish clearer rules for digital assets. However, the bill is unlikely to pass the Senate as currently written, and revisions are being discussed across the aisle. The Senate hopes to vote in 2026, but no firm date is scheduled.
U.S. regulators are not the only concern for the crypto market. While the current administration is more open to digital assets than some predecessors, other jurisdictions have tightened rules. The European Union increased oversight of crypto exchanges and stablecoins, and some Asian regulators have taken stricter stances.
China continues to ban cryptocurrency mining and trading outright. Cryptocurrency had been acting like a proxy for the broader tech sector, moving in lockstep with risk-on assets such as AI stocks. The chart above shows that correlation has broken down: Bitcoin is now underperforming not just stocks but also many commodities and bonds.
2 Stocks to Avoid as Crypto Markets Stall
With the launch of Bitcoin and Ethereum ETFs, investors have easier access to major cryptocurrencies through traditional channels. As a result, companies once prized for their crypto exposure—miners and treasury-heavy firms, for example—are losing investor interest.
Two stocks look especially vulnerable in the current environment. Both have substantial crypto exposure, and recent developments 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 shifted fully into crypto.
After hiring Ethereum co-founder Joseph Lubin into the C-suite, SBET converted itself into an Ethereum treasury, purchasing more than $3 billion in ETH and staking nearly all of it to generate yield.
That staking income has produced record revenue, but the company's fortunes are now tightly linked to Ethereum's price.
If regulators determine that ETH is a security next year, SharpLink could be forced to register as an investment company, triggering substantial compliance costs and forcing a material change to its business model.
The stock also faces valuation and technical headwinds. Despite record revenue, the company still lost $0.63 per share in Q3 2025, and the share price remains richly valued even after recent declines. The Moving Average Convergence Divergence (MACD) recently formed a bearish crossover, suggesting another wave of downward momentum could be imminent.
TeraWulf: Debt Risk Becoming Burdensome
TeraWulf Inc. (NASDAQ: WULF) aims to be a carbon-neutral cryptocurrency miner. One of its facilities, Project Nautilus, runs on hydroelectric power in New York.
TeraWulf also provides high-performance computing (HPC) solutions to data centers. That mix of revenue streams helped WULF shares rally roughly 120% year-to-date.
But much of the company's rapid expansion was debt-fueled, and those financing arrangements are starting to show strain.
TeraWulf reported about $5 billion in debt financing agreements in 2025, with total debt now exceeding $1.5 billion. Analysts warn this debt load could become unmanageable as costs rise and liabilities approach the value of the company's assets.
The fundamental weakness has spilled over into the market action: a key support level at the 50-day simple moving average (SMA) has been breached, and that breakdown was confirmed by a bearish MACD crossover. While TeraWulf is less reliant on Bitcoin for revenue than it once was, a further decline in BTC could exacerbate the company's debt challenges and place significant pressure on its balance sheet.
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