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 stands at 49.2%.
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According to a recent note from the research division of the New York Digital Investment Group (NYDIG), Bitcoin remains the best performing asset class in 2024 despite a sluggish third quarter. Crypto alpha’s 49.2% year-to-date gains still outpace other assets, although its lead has narrowed due to significant market challenges.
NYDIG research director Greg Cipolaro noted in an Oct. 4 report that Bitcoin gained just 2.5% in the third quarter, rebounding from second-quarter losses but limited by heavy selling. The asset faced headwinds from distributions to creditors from Mt. Gox and Genesis totaling nearly $13.5 billion, as well as significant sales of Bitcoin by the U.S. and German governments.
Despite these challenges, Bitcoin bucked seasonal trends with a 10% gain in September, typically a bearish month. Cipolaro pointed to continued demand for U.S. spot exchange-traded funds (ETFs), which gathered $4.3 billion in total flows for the quarter, as a supporting factor. Increased participation from companies like MicroStrategy and Marathon Digital has also boosted Bitcoin’s performance.
Recovery period after the third trimester
The cryptocurrency’s price has shown signs of recovery in recent days, climbing 3.06% over the past 24 hours to $63,905 on Monday morning in Hong Kong. The rise coincided with the release of positive U.S. jobs data, which showed 254,000 jobs created in September, beating forecasts and fueling optimism about the U.S. economy.
Cipolaro also noted that Bitcoin’s 90-day rolling correlation with U.S. stocks continued to increase during the third quarter, ending the quarter at 0.46. However, he argued 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 some stock sectors, have made gains against Bitcoin, with most asset classes experiencing a “record year.” This narrowing of Bitcoin’s lead underscores the competitive nature of the current investment landscape.
Impact of US Jobs 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 elections on November 5 are expected to play a significant role in market performance, with Cipolaro suggesting bigger gains if former President Donald Trump, who has embraced the crypto industry, wins.
“While both candidates will represent improvements over the Biden administration when it comes to their attitudes toward crypto, Trump, if he wins, will generate larger gains for the asset class given his wholehearted support for the industry,” Cipolaro said.
Additionally, 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 by limited trading over the last 6 months,” the fact remains that “Bitcoin is exactly where it was at this point in time.” course of the previous two”.
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