Bitcoin

Bitcoin Remains Top-Performing Asset Despite Sluggish Q3: NYDIG

Bitcoin continues to lead as the top-performing asset of 2024, despite a slower third quarter, according to a report from the New York Digital Investment Group (NYDIG).

Though Bitcoin’s growth in Q3 was modest at 2.5%, bouncing back from Q2 losses, it faced pressure from large sales, stated Greg Cipolaro, NYDIG’s head of research, in a note dated Oct. 4.

“Bitcoin remains the best-performing asset class of the year, although the gap between it and other assets has narrowed,” Cipolaro pointed out, with the cryptocurrency achieving a year-to-date return of 49.2%.

The market for Bitcoin has mostly stayed within a specific price range over the past six months, impacted by substantial sell-offs. These include distributions from Mt. Gox and Genesis creditors, totaling nearly $13.5 billion, and Bitcoin liquidations by the U.S. and German governments.

Meanwhile, assets such as precious metals and certain sectors in equities have gained ground on Bitcoin, with many asset classes performing exceptionally well this year, Cipolaro remarked.

Notably, Bitcoin defied expectations by climbing 10% in September, which is traditionally a challenging month for the asset.

Key drivers of Bitcoin’s performance in Q3 included sustained interest in U.S. spot exchange-traded funds (ETFs), which saw $4.3 billion in total inflows, as well as increased corporate holdings, particularly from companies like MicroStrategy and Marathon Digital.

Additionally, Bitcoin’s 90-day rolling correlation with U.S. equities rose during Q3, ending at 0.46, but Cipolaro emphasized that Bitcoin still offers solid diversification benefits. “Even though the correlation between Bitcoin and equities has increased, it’s still low enough to provide diversification advantages in multi-asset portfolios,” he explained.

The broader crypto market received a boost toward the end of Q3, influenced by global and political developments, such as former President Donald Trump’s growing support for the crypto sector, monetary easing measures by central banks, including the U.S. Federal Reserve, and stimulus actions from China.

Looking ahead, Cipolaro suggested that the upcoming U.S. election on Nov. 5 could be pivotal for Q4’s market performance. He predicts stronger outcomes for Bitcoin if Trump secures a victory.

“Both candidates would likely be more favorable to crypto compared to the current administration, but a Trump win could bring even greater gains, given his vocal support for the industry,” Cipolaro noted.

Historically, the fourth quarter has been a favorable period for Bitcoin, and Cipolaro hinted that several upcoming catalysts could lead to positive results. “Though some investors might be frustrated with the market’s recent rangebound movements, it’s important to note that Bitcoin is following a similar pattern to what we’ve seen in previous cycles at this time,” he concluded.