During the third quarter, Bitcoin (BTC) surprised many by undergoing an 11.1% loss, barely above long-term treasuries, also recording an -11.9% loss within the same timespan. The perplexing performance left crypto analysts and investors bemused, especially considering the favorable fundamental advancements seen within the crypto universe in recent times.
Greg Cipolaro, Global Head of Research at a Bitcoin-focused financial services firm, remarked on Bitcoin’s mediocre performance in spite of numerous catalysts that typically would have driven its price upward. Ranging from encouraging court cases such as Grayscale’s triumph over the SEC to macroeconomic changes relating to potential peak in interest rates, fluctuations over government funding, conversations on U.S. debt, and finally, striving to gain the nod for a spot Bitcoin ETF. Despite all these factors, the price of BTC remained static, hovering around the $31,000 mark.
It’s intriguing to note that Bitcoin wasn’t the solitary asset class to witness losses within Q3. Other asset clusters, including gold, the U.S. stock market, and real estate, saw significant percentage decreases. Persistently high inflation, escalating interest rates, apprehension of recession, and seasonal trends were cited by Cipolaro as potential culprits for this dip. Yet, history tells us that the fourth quarter has typically been a profitable period for Bitcoin.
Surprisingly, only four asset classes, including commodities and cash, saw gains during the quarter. Peter St. Onge, an economist allied with the Heritage Foundation, attributed Bitcoin’s underperformance to a temporary hiatus in climbing prices, further fueled by perceptions of more controlled inflation.
It’s vital to observe that current events in particular geopolitical zones, specifically Israel, could trigger a change in this trend due to their capacity to influence financial assets, usually causing hard assets to gather momentum and risk assets to plummet. With tensions mounting in the Middle East, Bitcoin might find itself on the beneficial end of this development.
Regardless of an arduous third quarter, Bitcoin has proven its mettle in 2023 with a robust performance, boasting a 65% increase year-to-date, and outperforming most other assets. This performance gives hope that even with all the hurdles, Bitcoin’s future remains buoyant. Despite the air of scepticism, the possibility of a stronger fourth quarter looms around the corner, offering a glimmer of optimism to the crypto enthusiasts.
Source: Cryptonews
