Analyst: Bitcoin’s performance in the third quarter was dismal, with second-to-last return

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

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

Greg Cipolaro, global head of research at Bitcoin Inc. 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 wasn’t the only asset to post losses last quarter. In fact, nearly all asset classes — including gold and other precious metals, U.S. stocks, and real estate — suffered significant declines.

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

Peter St. Onge, an economist at the Heritage Foundation, said a brief pause in bitcoin’s price gains could be the reason for its underperformance. “I think the main driver in the near term is that inflation looks more subdued,” he said, adding that gold has also been affected by these factors.

However, this trend may not last long. St. Onge pointed out that recent events in Israel could spark price action 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 view differs from that of NYDIG’s global head of research.

Cipolaro believes that "persistent" high inflation, rising interest rates, "recession concerns" and seasonal factors will affect returns, and emphasized that Bitcoin tends to perform poorly in the third quarter of each year. However, perhaps in an effort to give investors hope, he wrote that there is a silver lining to "underperformance": the fourth quarter will be one of the best quarters in the asset's history.

Despite Bitcoin’s recent good performance, Bitcoin investors will have to wait and see if the top cryptocurrency resumes its early 2023 trend. Bitcoin is up 63% this year, more than double the performance of the U.S. Large Cap Growth Fund.