Although the third quarter was difficult, Bitcoin was very strong in 2024 and remained the best performing currency. A new report from the New York Digital Investment Group (NYDIG) says Bitcoin posted a small gain of 2.5% in the third quarter, after declining in the previous three months. This brings growth so far this year to an astonishing 49.2%. Bitcoin is still doing very well, even though the market is under great pressure.
Market dynamics and challenges in the third quarter
This year was no exception to the common perception that the third quarter of the year is a challenging time Bitcoin. The cryptocurrency has faced numerous obstacles, such as substantial sell-offs by major holders.
It is important to note that the US and German governments have sold significant amounts of Bitcoin, which has dramatically affected market sentiment. Additionally, the resolution of long-standing bankruptcies, such as Mount Gox, resulted in the return of billions of dollars in Bitcoin to creditors, further impacting prices.
Despite all the difficulties Bitcoin faced – a month typically marked by declines for the digital asset – it exceeded expectations in September with a 10% gain. While other asset classes, such as gold and stocks, performed well, says Greg Cipolaro, the director of research at NECESSARYpointed out that Bitcoin’s ability to maintain its position as the top asset is remarkable. The analysis highlighted that Bitcoin’s price has risen between $65,000 and $54,000 over the past six months, with no clear pattern.
ETF inflows drive growth
Demand for US spot exchange-traded funds (ETFs) has been a substantial factor in supporting Bitcoin’s price during this period. In the third quarter, these ETFs received a total of $4.3 billion in inflows, with BlackRock’s iShares Bitcoin Trust leading the way.
This capital injection has allowed Bitcoin to find new ways to support its price during periods of greater market volatility. Conversely, exchange traded funds are based on Ethereum have struggled to achieve anywhere near the same level of interest.
BTC market cap currently at $1.22 trillion. Chart: TradingView.com
The growth of ETF investments continues to trend upward, demonstrating investor confidence in the growing potential of cryptocurrencies as a decent asset in light of the somewhat fluid and volatile conditions within the economic system. Mainstream markets are still healthy, although indices such as the S&P 500 have recently shown improvements. It is for this reason that Bitcoin’s holdings are uniquely diverse and really help multi-asset portfolios provide diversification benefits.
Image: StormGain
Future prospects: potential catalysts
As we head into the fourth quarter, analysts see big promise for Bitcoin. Historically, the top crypto has done well during this period. One of the many possible triggers that could increase prices, Cipolaro noted, is the approach US presidential election on November 5. If former President Donald Trump, who has expressed support for cryptocurrencies, wins, Bitcoin will gain hugely.
Furthermore, global monetary easing and stimulus measures from countries like China could further impact Bitcoin’s trajectory in the coming months. While some investors may feel frustrated by Bitcoin’s bandwidth-constrained trading in recent months, Cipolaro assured them that this is not unusual for this time of year.
Featured image of StormGain, chart from TradingView