Bloomberg: Gold and stocks outperformed Bitcoin this quarter

Author: Sunil Jagtiani, Bloomberg; Compiled by Wuzhu, Golden Finance

Stocks and bonds have delivered higher returns than Bitcoin this quarter, raising the possibility that the cryptocurrency boom is losing steam.

A gauge of global stocks, fixed income and commodities is ahead of the largest digital assetBitcoin fell about 5% from early April to 1:15 p.m. Singapore time on Friday.

Bitcoin retreated after hitting a record of $73,798 in March, and the rally to its peak has repeatedly failed. Inflows into U.S. bitcoin exchange-traded funds or optimism about an eventual rate cut by the Federal Reserve have not significantly reversed market moves.

Bitcoin has underperformed traditional assets so far this quarter

For Noelle Acheson, author of the Crypto Is Macro Now newsletter, most of the subscribers to the U.S. ETF, which was established five months ago, are likely to come from existing bitcoin holders. "In other words, not all ETF inflows represent new money entering the market, and only new money can drive prices," she wrote.

The team, led by JPMorgan strategist Nikolaos Panigirtzoglou, also explored the nature of demand for these products. Those products have attracted about $15 billion in net inflows so far, according to data compiled by Bloomberg.

“Exchange digital wallets may have shifted en masse to the new spot bitcoin ETFs,” they said. Excluding those factors, they estimate net inflows into cryptocurrencies, including ETFs, funding of venture portfolios and the “impulse” suggested by CME Group futures, at $12 billion this year.

‘SKEPTICAL’ STRATEGISTS

That’s down from about $45 billion in 2021 and about $40 billion in 2022, the strategists wrote in a note, adding that they “doubt” the current pace of inflows in 2024 will continue through the end of the year.

Bitcoin was trading at $66,750 as of 1:15 p.m. Singapore time on Friday. Bitcoin prices have risen fourfold since the start of last year, recovering from a bear market that saw it hit 2022. The coin’s biggest backers believe prices of $100,000 or more will be achieved over time, while critics say the cryptocurrency lacks intrinsic value. Bitcoin gained 67% in the three months to March, far ahead of an index of traditional assets. This quarter, the Bloomberg Global Bond, Stock and Commodity Index has gone from being essentially flat to rising more than 5%, enough to outperform Bitcoin. Acheson said selling of Bitcoin by Bitcoin miners in response to tougher conditions could be another reason for Bitcoin’s recent lackluster performance. Miners receive Bitcoin as a reward for operating the powerful computers that underpin the digital ledger. The reward is halved every four years, and the latest halving in April this year created a more challenging environment for mining operations.