Key takeaways
- Bitcoin posted a modest 2.5% gain in the third quarter despite market sell-offs.
- NYDIG notes that Bitcoin’s year-to-date gain is 49.2%.
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According to a recent note from the research division of New York Digital Investment Group (NYDIG), Bitcoin remains the best-performing asset class in 2024 despite a subdued third quarter. The alpha cryptocurrency’s 49.2% year-to-date gains still outperform other assets, although its lead has narrowed amid significant market challenges.
NYDIG Research Chief Greg Cipolaro noted in an October 4 article report that Bitcoin gained only 2.5% in the third quarter, recovering from the second quarter losses but limited by significant sell-offs. The asset faced headwinds due to creditor distributions from Mt. Gox and Genesis totaling nearly $13.5 billion, as well as large sales of Bitcoin by the US and German governments.
Despite these challenges, Bitcoin bucked seasonal trends with a 10% gain in September, normally a bearish month. Cipolaro highlighted continued demand for US spot exchange-traded funds (ETFs), which raised $4.3 billion in total flows during the quarter, as a supporting factor. Rising corporate ownership of companies like MicroStrategy and Marathon Digital also boosted Bitcoin’s performance.
Recovery period after the third quarter
The price of the cryptocurrency has shown signs of recovery in recent days, rising 3.06% in the last 24 hours to $63,905 on Monday morning in Hong Kong. This rebound coincided with the release of positive US employment data, which showed that 254,000 jobs were added in September, exceeding forecasts and fueling optimism about the US economy.
Cipolaro also noted that Bitcoin’s 90-day moving correlation with US stocks continued to rise during the third quarter, ending the quarter at 0.46. However, he maintained that Bitcoin still offers significant diversification benefits to multi-asset portfolios due to its relatively low correlation with other asset classes.
The research highlighted that other assets, such as precious metals and certain securities industries, have seen gains against Bitcoin, with most asset classes experiencing a “banner year.” This reduction in Bitcoin’s advantage underscores the competitive nature of the current investment landscape.
Impact of US employment data and elections on the Bitcoin market
Looking ahead, Cipolaro expects the fourth quarter to be traditionally bullish for Bitcoin, with several potential catalysts on the horizon. The upcoming US election on November 5 is expected to play a major role in market performance, and Cipolaro suggests further gains if former President Donald Trump, who has embraced the cryptocurrency industry, wins.
“While both candidates will be improvements over the Biden administration regarding their attitude towards cryptocurrencies, Trump, if he wins, will drive greater gains for the asset class given his full support for the industry,” Cipolaro said.
Furthermore, factors such as global monetary easing and stimulus measures in China could further influence Bitcoin’s trajectory in the coming months. Cipolaro reassured investors, stating that while investors “might be frustrated with trading within the range for the last 6 months,” it remains that “Bitcoin is exactly where it was right now in the previous two.”
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