Bitcoin Faces Challenging Q3 Performance
Bitcoin (BTC) had a difficult third quarter, with a loss of 11.1%, just above long-term treasuries that experienced a -11.9% loss during the same period. This disappointing performance has left analysts and investors puzzled, given the positive developments in the crypto space during this time.
In a recent research note, Greg Cipolaro, Global Head of Research at NYDIG, a Bitcoin-focused financial services firm, highlighted Bitcoin’s lackluster performance despite various factors that could have driven its price higher. These factors include favorable court cases, macroeconomic changes related to interest rates, government funding debates, discussions about U.S. debt, and efforts to secure approval for a spot Bitcoin ETF.
Despite these developments, Bitcoin remained range-bound with an upper ceiling around $31,000 according to Cipolaro.
It’s important to note that Bitcoin wasn’t the only asset to experience losses in Q3. Most asset classes including gold, the U.S. stock market, and real estate saw significant percentage drops. Cipolaro attributed this to persistently high inflation, rising interest rates, recession concerns, and seasonality.
However, historically the fourth quarter has been strong for Bitcoin.
Middle East Tensions Could Benefit Bitcoin
Economist Peter St. Onge from the Heritage Foundation suggests that Bitcoin’s underperformance may be due to a temporary pause in rising prices caused by controlled inflation. However, recent events in Israel could change this trend as they often impact financial assets. In such situations, hard assets tend to strengthen while risk assets decline.
Hot Take: Bitcoin’s Resilience Throughout 2023
Despite its challenging third quarter, Bitcoin has demonstrated robust performance throughout 2023, with a year-to-date gain of 65%. This growth has outpaced most other assets.
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