Analysts have highlighted Bitcoin’s disappointing performance in the second quarter of 2024, where it has trailed behind stocks and bonds. According to Bloomberg, Bitcoin has underperformed global equities, fixed income, and commodities this quarter, shedding approximately 5% from early April to mid-June.
After reaching a peak of $73,798 in March, Bitcoin has struggled to reclaim that position. In contrast, Bitcoin had surged 67% in the previous quarter, significantly outperforming traditional asset indexes. This previous rally was largely driven by excitement surrounding the approval of US Bitcoin exchange-traded funds (ETFs). However, that enthusiasm seems to be waning, according to Noelle Acheson, author of the “Crypto Is Macro Now” newsletter.
Acheson notes that the inflow of new funds into Bitcoin ETFs has slowed. She points out that recent inflows are mostly from existing Bitcoin holders, stressing that “only new money will move the price.” To date, Bitcoin ETFs have attracted over $15 billion, making them highly sought-after investment vehicles on Wall Street.
Strategists at JPMorgan Chase have observed a shift of funds from digital wallets on exchanges to new ETF products. They estimate this year’s net flow to crypto, including ETFs and other sources, at $12 billion, significantly lower than the $45 billion in 2021 and $40 billion in 2022. They remain skeptical about the continuation of strong inflows through the rest of 2024.
Acheson further suggests that Bitcoin miners might be contributing to the cryptocurrency’s lackluster performance. Miners have been selling their holdings to stay operational, particularly after the April halving, which reduced the block reward from 6.25 BTC to 3.125 BTC, leading to a significant drop in profitability.
In May, the crypto mining analytics firm Hashrate Index warned of an impending “hefty upward difficulty adjustment.” Earlier, the research firm Kaiko had cautioned about potential selling pressure from miners. “If miners were forced to sell even a fraction of their holdings over the coming months, this would negatively impact markets,” Kaiko noted.
Despite the recent performance slump, some analysts remain optimistic about Bitcoin’s future.
