Bitcoin (BTC) faced a challenging third quarter in the year, with investors experiencing an 11.1% loss, just slightly better than long-term treasuries, which yielded a negative return of -11.9% over the same period. Greg Cipolaro, the Global Head of Research at Bitcoin firm NYDIG, analyzed the cryptocurrency’s underwhelming performance in light of recent developments in the crypto sphere.
Analysts give insight into Bitcoin’s performance
Despite several positive factors such as favorable court cases, macroeconomic changes, debates over government funding, U.S. debt discussions, and efforts to secure approval for a spot Bitcoin ETF, the asset remained stuck within a certain price range, which Cipolaro identified as around $31,000. It is important to note that the asset wasn’t the only asset experiencing losses in the last quarter. Virtually every asset class, including gold, other precious metals, the U.S. stock market, and real estate, suffered significant percentage drops.
Surprisingly, only four assets managed to secure gains during this period, with commodities leading at 15.5%, followed by cash at 1.3%. Peter St. Onge, an economist associated with the Heritage Foundation, suggested that the asset’s lackluster performance in the short term could be attributed to a temporary slowdown in rising prices, driven by the perception of less severe inflation. He noted that this trend was also affecting gold. However, St. Onge cautioned that this trend might not be long-lasting, pointing to potential geopolitical developments in the Middle East as a catalyst for significant price movements in various financial assets.
Perspectives on the factors affecting BTC’s performance
St. Once also emphasized that Bitcoin occupies a unique position as both a hard asset and a risk asset. Cipolaro’s perspective differed from St. Onge’s analysis. He believed that persistently high inflation, increasing interest rates, concerns of an impending recession, and seasonal factors all contributed to Bitcoin’s lackluster performance. Notably, Bitcoin has historically shown weak performance during the third quarter of each year. To offer a glimmer of hope to investors, Cipolaro mentioned that historically, the fourth quarter tends to be one of Bitcoin’s strongest quarters.
Despite its recent quarterly struggles, BTC investors are eagerly awaiting to see if the cryptocurrency can regain its momentum from early 2023 when it demonstrated impressive growth. So far in the year, Bitcoin has gained 63%, making it one of the few assets with double-digit gains, significantly outperforming its closest competitor, U.S. Large Cap Growth Funds, by more than twice the returns. While experts have different opinions on the reasons behind Bitcoin’s subdued performance, investors remain optimistic, hoping for a strong comeback in the historically favorable fourth quarter.
