Analyst: Bitcoin’s third quarter performance dismal, second-to-last returns

Author: Pedro Solimano, Decrypt; Compiler: Songxue, Golden Finance

Bitcoin (BTC) bottomed in the third quarter of the year, with investors losing 11.1%, barely beating long-term Treasury bonds’ net value of -11.9% during the same period.

Greg Cipolaro, global head of research at Bitcoin firm NYDIG, writes about the cryptocurrency’s poor performance and how it challenges recent events in the cryptocurrency space.

Cipolaro pointed to favorable court cases, macroeconomic changes, the recent “quagmire” in government funding, the debate over U.S. debt, and “ongoing efforts to gain approval for a spot Bitcoin ETF,” which have not led to a Bitcoin breakout The upper limit of the current range - Bitcoin’s current range is $31,000, he said.

However, Bitcoin was not the only asset to post losses last quarter. In fact, nearly every asset class — including gold and other precious metals, U.S. stocks and real estate — suffered sharp declines.

Notably, only four assets emerged victorious during the quarter, with commodities rising 15.5%, followed by cash, which rose 1.3%.

Heritage Foundation economist Peter St. Onge said that a brief pause in Bitcoin’s price rise may be the reason for its poor performance. “I think the main driver in the near term is that inflation is looking more stable,” he said, adding that gold was also affected by these effects.

However, this trend may not last long. St. Onge noted that recent events in Israel could trigger price movements in financial assets. “We have to see what happens in the Middle East,” he said, explaining that “hard assets tend to go up but risk assets go down.”

To him, “Bitcoin is both.”

St. Onge’s perspective differs from that of NYDIG’s global research director.

Cipolaro believes that “persistent” high inflation, rising interest rates, “recession fears” and seasonal factors will all impact returns, stressing that Bitcoin tends to underperform in the third quarter of each year. Still, perhaps to give investors hope, he wrote that there was a silver lining to the “underperformance”: the fourth quarter would be one of the best in the asset’s history.

Despite Bitcoin’s recent good performance, Bitcoin investors will still have to wait and see if the top cryptocurrency resumes its early 2023 trend. Bitcoin is up 63% this year, more than double that of U.S. large-cap growth funds.