Bitcoin (BTC) has outperformed almost every asset class in the past 12 months, but a recent drawdown has investors “spooked,” according to a Sept. 19 report by asset manager VanEck.
Spot BTC prices are up some 124% since September 2023, and BTC has gained relative share among cryptocurrencies, according to the report. Bitcoin’s market capitalization — which is approximately $1.25 trillion as of Sept. 20 — comprises 56% of crypto’s total, up some 15% since a year ago, VanEck said.
VanEck expects Bitcoin’s “long term Bull Market” to continue for the foreseeable future, adding that “Bitcoin’s adoption as an investment vehicle isn’t driven by the same forces today as in 2023.”
Source: VanEck
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Previously, BTC adoption was largely a retail-driven phenomenon, accelerated in 2023 by “inscriptions,” which VanEck describes as “a viral innovation enabling users to store media files directly on the Bitcoin blockchain.”
Inscriptions’ waning popularity in 2024 contributed to an approximately 52% year-over-year decline in transaction fees on the Bitcoin network, the report said.
Bitcoin’s “price appreciation this year is better explained by growing adoption as money: a vehicle for storing and transferring value,” VanEck said.
In January, United States regulators authorized the listing of spot BTC exchange-traded funds (ETFs), which now command approximately $55 billion in net assets, according to data from fund researcher Morningstar.
Bitcoin often outperforms following halvings. Source: VanEck
Since then, wealth advisers have adopted BTC ETFs “faster than any new ETF in history,” Matt Hougan, asset manager Bitwise’s chief investment officer, said in a Sept. 9 post on the X platform.
“Bitcoin’s long-term growth is driven by powerful, enduring mega-themes: the rising need for decentralized, censorship-resistant networks, growing institutional adoption […] and increasing sovereign involvement in mining and cross-border trade,” according to the report, which was authored by Matthew Sigel, VanEck’s head of digital assets research.
The biggest losers in the past 12 months were Bitcoin miners, who have had a “terrible year” in 2024, the report said. The Bitcoin network’s April “halving” is largely to blame. Every four years, the number of BTC mined per block is reduced by half. The April event reduced mining rewards from 6.25 BTC to 3.125 BTC per block.
That has weighed on BTC miners’ fundamentals. “The Bitcoin Hashprice, a unit of profitability in the industry that measures the revenue earned for each one trillion cryptographic hash calculations per second, is down 97% year-over-year,” VanEck said.
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