Bitcoin Remains the Top Asset of 2024 Despite Weak Q3: NYDIG

Highlights:

• Bitcoin remains the best-performing asset of 2024, with year-to-date gains of 49.2%.
• September saw a 10% gain for Bitcoin, defying typical bearish market trends.
• Cipolaro noted that the upcoming U.S. presidential election could significantly influence Bitcoin’s market dynamics.

According to a recent note from New York Digital Investment Group’s (NYDIG) research division, Bitcoin remains the best-performing asset so far in 2024, even after a “seasonally weak” third quarter. In Q3, Bitcoin’s performance increased by only 2.5%, yet its year-to-date gains of 49.2% still surpass those of other assets.

Bitcoin’s performance in Q3 was affected by multiple factors, including the distribution of nearly $13.5 billion in assets from Mt. Gox and Genesis creditors. Additionally, significant Bitcoin sales by the US and German governments pressured its price.

NYDIG: Bitcoin remains the best-performing asset so far this year with a year-to-date gain of 49.2%. The upcoming US election on Nov. 5 will play a big part in market performance for Q4, and expects larger gains if Trump wins. Q4 is traditionally a bullish period for BTC and… pic.twitter.com/8jYmktA116

— Wu Blockchain (@WuBlockchain) October 7, 2024

Bitcoin Defies Trends with September Gains Amid Strong ETF Demand and Positive Economic Data

Despite these challenges, Bitcoin defied seasonal trends with a 10% gain in September, a month typically known for bearish performance. NYDIG’s research head, Greg Cipolaro, noted strong demand from US spot exchange-traded funds (ETFs), which attracted $4.3 billion in total flows for the quarter, as a contributing factor. Increased corporate ownership from companies like MicroStrategy and Marathon Digital further strengthened Bitcoin’s performance.

The cryptocurrency’s price has recently shown signs of recovery, rising 1.89% in the past 24 hours to $63,219. This increase aligns with the release of positive US jobs data, which reported 254,000 jobs added in September, surpassing forecasts and boosting optimism about the US economy.

Cipolaro also observed that Bitcoin’s rolling 90-day correlation with US stocks increased throughout Q3, finishing the quarter at 0.46. However, he emphasized that Bitcoin still provides substantial diversification benefits to multi-asset portfolios due to its relatively low correlation with other asset classes.

Cipolaro said:

“While Bitcoin’s correlation with equities rose, the most recent level is still low, implying that Bitcoin offers significant diversification benefits to multi-asset portfolios.”

The research indicated that other assets, like precious metals and specific equity sectors, have gained against Bitcoin, with most asset classes enjoying a “banner year.” This narrowing of Bitcoin’s lead highlights the competitive dynamics of the current investment landscape.

Upcoming U.S. Presidential Election Could Boost Bitcoin Gains in Q4

Looking ahead, Cipolaro emphasized the potential effects of the upcoming U.S. presidential election on November 5, which he believes could greatly impact market dynamics in the fourth quarter. He suggested that a Trump victory might lead to larger gains in the crypto market. He concluded by stating that Q4 is typically a bullish period for BTC, with various factors likely aligning to support additional gains.

Cipolaro wrote:

“While both candidates will be improvements over the Biden administration regarding their attitude towards crypto, Trump, if he wins, will deliver bigger gains for the asset class given his full-throated endorsement of the industry.” 

Additionally, global monetary easing and stimulus measures in China could further affect Bitcoin’s trajectory in the coming months. Cipolaro reassured investors by noting that while they “might be frustrated with the rangebound trading over the past 6 months,” Bitcoin is currently positioned similarly to where it was at this time in the previous two years.