Bitcoin Still 2024’s Top Asset Despite Challenging Q3, Says NYDIG
In an Oct. 4 note, Greg Cipolaro, NYDIG’s head of research, highlighted Bitcoin’s resilience in the face of challenging market conditions, posting a modest 2.5% gain in Q3 despite significant sell-offs.
Though Bitcoin (BTC) only posted a slight recovery after a difficult second quarter, Cipolaro noted that the cryptocurrency still boasts an impressive 49.2% year-to-date gain. However, he cautioned that Bitcoin’s lead as the top-performing asset class has narrowed due to strong performances from other asset classes like precious metals and certain equity sectors.
Pressures From Large BTC Sales and Government Distributions
Bitcoin’s performance in Q3 was weighed down by several factors, including substantial sell-offs linked to the Mt. Gox and Genesis creditor distributions, which together released nearly $13.5 billion worth of BTC into the market. Additionally, sales from the U.S. and German governments contributed to Bitcoin’s relatively subdued performance over the quarter.
However, Bitcoin managed to defy expectations in September, typically a bearish month for the asset, gaining 10%. Cipolaro attributed the late-quarter rally to several catalysts, including continued demand from U.S. spot exchange-traded funds (ETFs), which attracted $4.3 billion in total inflows during the period.
Corporate Ownership and Correlation with Stocks
Increased corporate ownership of Bitcoin also bolstered its performance in Q3. Companies like MicroStrategy and Marathon Digital, a major cryptocurrency mining firm, continued to expand their Bitcoin holdings. Cipolaro also reported that Bitcoin’s 90-day correlation with U.S. stocks rose to 0.46 by the end of the quarter, indicating an increasing correlation with traditional equity markets.
Despite the correlation increase, Cipolaro maintained that Bitcoin still presents strong diversification benefits for multi-asset portfolios.
Cipolaro remarked, “Even though Bitcoin’s correlation with stocks has risen, the current level is still low, indicating that Bitcoin offers significant diversification benefits.”
Political and Economic Developments Boosting Crypto
Cipolaro pointed to several political and economic developments that provided a boost to crypto markets in late Q3. These include former President Donald Trump’s support for the crypto industry, and monetary easing measures by global central banks like the Federal Reserve and China’s central bank, which introduced stimulus measures and increased the money supply.
With the U.S. election approaching on Nov. 5, Cipolaro predicted that the outcome could significantly impact Bitcoin’s performance in the fourth quarter. He expressed optimism that a Trump victory could deliver larger gains for the cryptocurrency market, thanks to his pro-crypto stance.
“While both candidates would signify progress over the Biden administration’s cryptocurrency policies, Trump, if elected, is anticipated to deliver greater benefits for the asset class because of his strong support of the industry,” Cipolaro added.
Optimistic Outlook for Q4
Cipolaro noted that Q4 has historically been a bullish period for Bitcoin, with multiple catalysts potentially pushing the cryptocurrency higher.
“Although investors may be frustrated by Bitcoin’s limited trading range over the last six months, it’s important to highlight that the cryptocurrency is currently in line with its position during previous cycles periods it was at this time. in the previous two,” Cipolaro said, signaling that Bitcoin’s long-term performance remains on track.
Despite facing challenges in Q3, Bitcoin remains the top-performing asset of 2024, with promising factors such as increasing institutional demand and a favorable political environment set to drive its performance in the final quarter. With history on its side, Bitcoin could be poised for another strong finish to the year.
I am Toby Rothschild, Co-Founder of Spearmint and author at Coinography, and a strategist focused on advancing Web3 innovation, digital ecosystems, and the future of decentralized technology. I combine product thinking, creative leadership, and deep interest in emerging trends to help shape how individuals and organizations interact with the next generation of digital systems.
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