Bitcoin has emerged as the leading asset for 2024, despite facing challenges during a seasonally slower third quarter. According to the New York Digital Investment Group (NYDIG), the cryptocurrency recorded a modest gain of 2.5% in Q3, recovering from a decline in the previous quarter while contending with substantial sell-offs during this timeframe.
Year-to-date, Bitcoin has achieved a remarkable 49.2% increase, although its performance advantage over other asset classes has diminished. The trading environment has remained largely stagnant over the last six months, hampered by significant distributions from notable bankruptcies, such as Mt. Gox and Genesis, which collectively amount to nearly $13.5 billion. Additionally, significant sales of Bitcoin by the U.S. and German governments have contributed to this trend.
Interestingly, despite these headwinds, Bitcoin managed to rally by 10% in September, a month typically associated with negative trends for the asset. Key factors contributing to Bitcoin ’s recent performance include sustained interest from U.S. spot exchange-traded funds (ETFs), which attracted $4.3 billion during the quarter. Moreover, corporate adoption has also risen, with companies like MicroStrategy and Marathon Digital increasing their Bitcoin holdings.
The correlation between Bitcoin and U.S. equities has been rising, ending Q3 at a level of 0.46. Despite this upward trend, Bitcoin still presents significant opportunities for diversification within multi-asset portfolios.
Looking ahead, political developments may influence Bitcoin ’s trajectory. The upcoming U.S. election on November 5 could impact market performance, with expectations that a victory for Donald Trump could lead to stronger gains for Bitcoin due to his support for the crypto industry. Historically, the fourth quarter tends to be bullish for Bitcoin , and several factors could catalyze similar patterns seen in previous years. Investors have been advised to maintain perspective, noting that Bitcoin ’s current positioning is reminiscent of its situation during this period in past cycles.
