Bitcoin is still the top-performing asset in 2024, even after a sluggish third quarter, according to the New York Digital Investment Group (NYDIG). Despite obstacles, the cryptocurrency could be set for significant gains in Q4.
Bitcoin’s Performance Amid Market Headwinds
Bitcoin saw a modest 2.5% increase in Q3, bouncing back from losses in Q2 but facing challenges due to large sell-offs, as reported by NYDIG’s research head, Greg Cipolaro, in an October 4 note. Despite these hurdles, Bitcoin has still achieved a year-to-date gain of 49.2%, maintaining its status as the best-performing asset class of 2024.
However, Cipolaro acknowledged that other assets, including precious metals and certain equity sectors, have closed the gap with Bitcoin, with many having strong performances throughout the year.
The past six months have seen Bitcoin trading within a limited range, affected by significant events like the Mt. Gox and Genesis creditor distributions—totaling approximately $13.5 billion—and substantial Bitcoin sell-offs from both the U.S. and German governments.
Factors Driving Bitcoin’s Recent Trends
Despite Q3’s overall sluggishness, Bitcoin defied expectations by posting a 10% gain in September, a month that is historically bearish for the cryptocurrency. Cipolaro attributed this resilience to factors such as steady demand from U.S. spot exchange-traded funds (ETFs), which attracted $4.3 billion in inflows over the quarter.
Additionally, corporate investment in Bitcoin increased, with firms like MicroStrategy and Marathon Digital bolstering their holdings, providing further support to Bitcoin’s price stability.
Cipolaro also highlighted Bitcoin’s 90-day correlation with U.S. stocks, which rose to 0.46 by the end of Q3. Despite this increase, he argued that Bitcoin remains a valuable diversification tool for multi-asset portfolios. “While Bitcoin’s correlation with equities rose, the most recent level is still low, implying that Bitcoin offers significant diversification benefits,” Cipolaro stated.
Political and Economic Catalysts for Q4
The crypto market experienced a boost late in Q3 due to several political and economic developments. These included former President Donald Trump’s vocal support for the crypto industry, the Federal Reserve’s monetary easing measures, and China’s central bank expanding the money supply.
Looking ahead, Cipolaro emphasized the impact of the upcoming U.S. presidential election on November 5. He expects that a Trump victory would result in greater gains for Bitcoin due to his positive stance on the industry. “While both candidates are likely to be more favorable to crypto compared to the Biden administration, a Trump win could lead to even bigger gains for the asset class,” Cipolaro wrote.
Historically, Q4 has been a bullish period for Bitcoin, and Cipolaro believes several catalysts could support another strong finish for the cryptocurrency.
