Bitcoin (BTC) experienced a tough third quarter, registering a decline of 11.1%. This places it slightly ahead of long-term treasuries, which saw a dip of -11.9% within the same timeframe.
This underwhelming performance has left both cryptocurrency experts and investors scratching their heads, especially considering the positive shifts within the crypto domain during this phase.
In a recent research paper, Greg Cipolaro, the Chief of Research at the Bitcoin-centric financial institution NYDIG, pointed out the subdued trajectory of Bitcoin even in the presence of multiple potential growth drivers.
Key events that could have propelled Bitcoin’s value include favorable legal outcomes like Grayscale’s victory against the SEC, potential peaks in interest rates, debates surrounding government budgets, discussions on U.S. national debt, and the continued push for green-lighting a direct Bitcoin ETF.
Even with these events, Bitcoin didn’t break out of its prevailing range, which, according to Cipolaro, has a ceiling close to $31,000.
It’s important to highlight that Bitcoin wasn’t the sole asset to see a dip in Q3. Major asset categories like gold, the U.S. stock market, and property also recorded notable declines.
Cipolaro suggested that the underlying reasons for this downturn could be attributed to the continuous high inflation rates, increasing interest rates, worries of an impending recession, and the influence of seasonality. However, he also emphasized that historically, Bitcoin often performs well in the fourth quarter.
Remarkably, only a handful of assets, including commodities and liquid cash, reported positive returns during this period.
Middle East tensions could benefit Bitcoin
In the meantime, economist Peter St. Onge, affiliated with the conservative-leaning Heritage Foundation, shared with the crypto media platform Decrypt that the lag in Bitcoin’s performance might be a temporary halt in its price surge, stemming from the belief of managed inflation.
Yet, St. Onge pointed out that this pattern might shift in light of recent incidents in Israel. Such events frequently influence the global financial scene, leading to a bolstering of tangible assets and a dip in riskier ones.
Regardless of its hurdles in the third quarter, Bitcoin has showcased commendable growth in 2023, recording a 65% surge year-to-date, surpassing the momentum of many other investment vehicles.