Bitcoin (BTC) is set to wrap up the year outperforming all major traditional assets, data provider Kaiko Research predicts. The cryptocurrency is up more than 160% in 2023 despite tight macroeconomic conditions and headwinds in the crypto industry.
Just a few companies are ahead of Bitcoin performance, including NVIDIA Corp (NVDA), which has jumped 241% year-to-date, outpacing Bitcoin’s 163% gain.
Risk-Adjusted Returns on various Assets. Source: Kaiko.
Kaiko’s analysis breaks down BTC price action throughout the year into three stages. BTC traded almost always between $25,000 and $30,000 between March and October, dropping sharply and hitting multi-year lows in mid-2023. However, following BlackRock’s filing for a spot Bitcoin exchange-traded fund (ETF) on June 15, the cryptocurrency’s market price rose above $40,000.
“So, despite a somewhat boring middle of the year, BTC has one of the best Sharpe Ratios of any major assets this year, second only to semiconductor giant Nvidia, whose stock more than doubled from January to May on AI excitement.”
The United States Securities and Exchange Commission (SEC) is expected to make a final decision in early January on whether to allow spot trading of Bitcoin via ETFs. Companies in line for approval include major Wall Street players, notably Fidelity, WisdomTree, ARK and 21Shares, and VanEck, among others. The approval of the investment vehicle will likely boost Bitcoin prices and liquidity. BlackRock, for instance, is planning to seed its product with $10 million.
Kaiko’s analysis also points to the reverse of Bitcoin correlation with the stock market index Nasdaq 100. According to the company, Bitcoin has often been portrayed as a hedge against inflation, compared to a digital version of gold. However, its value was predominantly influenced by macroeconomic factors, the performance of the U.S. dollar, and stock market trends.
“This trend began to reverse this year, with a consistent downtrend from January to July as BTC rallied and a reversal in late summer as it stalled under $30k. The most rapid decorrelation came recently, as BTC broke $40k. It remains to be…
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