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According to new data from the digital asset management company Galaxy, Bitcoin ($BTC) is the best-performing asset of the year compared to equities, fixed-income securities, indices, and commodities on a risk-adjusted basis.
The newly released data corresponds to gold increasing and equities decreasing. It explains how the volatility of Bitcoin is on a multi-year downward trend, and that futures open interest and perpetual swap funding rates suggest the rally is not based purely on speculation.
On-chain data shows ongoing accumulation, longer holding times, and growing ownership dispersion. The upcoming 4th halving is expected to precede a longer-term bullish advance.
Bitcoin performance as compared to other assets
Bitcoin has been the top-performing asset of 2023 when measuring risk-adjusted performance (Sharpe ratio) compared to equities, fixed-income securities, indices, and commodities. It has consistently been one of the best performers across various timeframes, with the exception of the one-year timeframe.
Bitcoin’s correlation with equities has been high over the past 18 months but has recently decreased. Meanwhile, its correlation with gold has increased significantly — particularly since the banking crisis.
These correlations indicate that Bitcoin has exhibited safe-haven characteristics in the current economic climate — demonstrating the value of Bitcoin’s fundamental characteristics.
Notable future supply events
There are two upcoming supply events for Bitcoin — one bullish and one potentially bearish. The 4th halving — set for April 2024 — is expected to bring the inflation rate below 1%, historically leading to subsequent bull runs. Galaxy notes that the drop in new daily issuance may be less impactful than expected.
Furthermore, the Mt. Gox bankruptcy trustee holds 141,686 $BTC — which it said recently it does not plan to sell. The largest creditor —the Mt. Gox Investment Fund — opted to receive early payment in approximately 70% $BTC and 30% cash and does not plan to sell the $BTC it receives.
The early distribution date is expected September and it’s expected that most $BTC will not be sold upon distribution. There may be second-order impacts in $BTC lending markets if creditors look to lend their $BTC either off-chain or on-chain via converting to WBTC, according to Galaxy.
Read the full Galaxy report.