NYDIG: Bitcoin (BTC) Posted a Modest 2.5% Gain in Q3 2024, Despite Rangebound Trading

According to a recent research note by Greg Cipolaro, Global Head of Research at NYDIG, Bitcoin posted a modest 2.5% gain in the third quarter of 2024

Bitcoin price action remained largely subdued in Q3, with a modest gain of 2.5%, as highlighted by NYDIG in their recent report. Despite the limited price movement, Bitcoin demonstrated resilience in a challenging environment.

A key factor impacting Bitcoin’s performance was the resolution of several major bankruptcies, including Mt. Gox, which saw billions of dollars worth of Bitcoin being returned to creditors. These developments, along with U.S. and German government sales of Bitcoin, contributed to downward pressure on the asset’s price. However, NYDIG’s analysis suggests that the fear of these coins coming to market may have had a greater effect on Bitcoin’s price than the actual selling activity.

Another trend observed was the relative underperformance of Bitcoin compared to traditional asset classes during Q3. Lower interest rates provided a tailwind for assets such as utilities, real estate, and small-cap stocks, which outperformed Bitcoin during this period. Gold also set new all-time highs, further challenging Bitcoin’s performance relative to other assets.

Despite these headwinds, Bitcoin remained the best-performing asset in 2024, according to NYDIG. However, the lead over other asset classes has narrowed, especially with the spike in volatility during August. While other assets, including precious metals and equities, also showed gains, NYDIG’s analysis shows that Bitcoin continues to lead on a year-to-date basis. Most asset classes are enjoying a strong year, echoing the trends observed in 2023.

Interestingly, Bitcoin also defied typical trends in September, posting a gain in what is historically a weak month for the asset, according to NYDIG. The report also highlighted a rising correlation between Bitcoin and U.S. equities during Q3, ending the quarter with a rolling 90-day correlation of 0.46. However, NYDIG’s analysis notes that while Bitcoin’s correlation with stocks has increased, it remains low enough to offer significant diversification benefits for multi-asset portfolios.

One of the dominant themes in Q3 was the emergence of large Bitcoin holders, whether through distribution or sales, according to NYDIG. Notably, the Mt. Gox and Genesis bankruptcies, along with government sell-offs, led to the transfer of around 204,000 Bitcoins during the quarter, valued at over $12.6 billion. However, NYDIG’s analysis shows that despite the magnitude of these events, there was little evidence of panic selling by creditors.

Another key factor highlighted by NYDIG was the continued demand for U.S. spot exchange-traded funds (ETFs) in supporting Bitcoin’s price during the quarter. According to Cipolaro, these ETFs gathered $4.3 billion in total flows, with BlackRock’s iShares Bitcoin Trust leading the pack. NYDIG also noted that while Grayscale’s new Bitcoin Mini Trust made a competitive entry into the market, BlackRock continues to dominate ETF inflows.

Looking ahead to Q4, which is traditionally one of Bitcoin’s strongest periods, NYDIG identifies several catalysts that could boost Bitcoin’s performance. Among them is the upcoming U.S. presidential election, which could have a significant impact on the asset’s price. According to Cipolaro, a Trump victory would likely deliver substantial gains for Bitcoin, given the former president’s endorsement of the crypto industry. However, NYDIG also suggests that Bitcoin’s strength as an asset detached from traditional financial and political systems could benefit from post-election instability, regardless of the outcome.

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