Bitcoin remains the best-performing asset so far this year, even after a “seasonally weak” third quarter, according to the New York Digital Investment Group (NYDIG).
Bitcoin (BTC) gained just 2.5% over Q3, bouncing back after falling in the second quarter but hamstrung by large sales, said NYDIG’s research head Greg Cipolaro in an Oct. 4 note.
“Bitcoin is still the best-performing asset class in 2024, but its lead has narrowed,” Cipolaro said. He noted the cryptocurrency has seen a year-to-date gain of 49.2%.
Trading has remained largely rangebound for much of the past six months amid significant headwinds such as the Mt. Gox and Genesis creditor distributions — together totaling almost $13.5 billion — and large BTC sell-offs from the United States and German governments.
Asset returns year-to-date. Source: NYDIG
Other assets, such as precious metals and certain equity industries, have made gains against BTC, with most asset classes having a “banner year,” Cipolaro added.
Bitcoin also bucked a trend, increasing 10% in September, which is usually a bearish month for the asset.
Factors influencing recent performance include continued demand from US spot exchange-traded funds (ETFs), which gathered $4.3 billion in total flows for the quarter.
There was also increased corporate ownership of Bitcoin from software firm MicroStrategy and crypto miner Marathon Digital.
Cipolaro also noted that Bitcoin’s rolling 90-day correlation with US stocks continued to rise during Q3, ending the quarter at 0.46, but said it remained a good option for diversification.
“While Bitcoin’s correlation with equities rose, the most recent level is still low, implying that Bitcoin offers significant diversification benefits to multi-asset portfolios.”
BTC correlations with other asset classes. Source: NYDIG
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Crypto markets were buoyed toward the end of Q3 amid political developments, including former President Donald Trump’s embrace of the crypto industry, global monetary easing with the Federal Reserve cutting rates, and China’s central bank introducing stimulus measures and increasing the money supply.
Cipolaro noted that the US election on Nov. 5 will play a big part in market performance for Q4, and expects more considerable gains if Trump wins.
“While both candidates will be improvements over the Biden administration regarding their attitude toward crypto, Trump if he wins, will deliver bigger gains for the asset class given his full-throated endorsement of the industry,” Cipolaro wrote.
Cipolaro said that Q4 is traditionally a bullish period for BTC and there are several catalysts that could see history rhyme.
“While investors might be frustrated with the rangebound trading over the past 6 months, rest assured, as compared with the previous cycles, Bitcoin is exactly where it was at this time in the previous two.”
Current market cycle position. Source: NYDIG
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