Bitcoin is increasingly confirming itself over time as an extremely solid and mature asset, so much so that it has outperformed the Nasdaq and the S&P500 since August 2020 by recording an excellent +126%.
The two stock indices, while posting positive returns during this period, have not come even close to the numbers of digital gold.
However, Bitcoin has been experiencing a very up-and-down price trend in recent months, with variations that do not convince cryptocurrency traders and that could suggest a prolonged continuation of the bearish market.
All crypto industry insiders are waiting for the SEC’s approval for a Bitcoin spot ETF, finally ushering in the long-awaited bull run, which could likely come in Q1/Q2 2024.
Bitcoin dominates financial markets: since August 2020 it has grown more than Nasdaq and S&P500
Bitcoin and its supporters have been struggling for months now with U.S. federal agencies to gain legitimacy as a regulated asset with proper tools for its market trading.
Looking at the cryptocurrency’s historical data and comparing it with those of the Nasdaq and S&P500 we quickly realize how important Bitcoin can be as a speculative component in building a balanced portfolio.
In fact, since August 2020, digital gold has been +126% in the market, making it a throat for the equity indices just mentioned, which have given their investors significantly less attractive performance.
Specifically compared to the target date, the Nasdaq is up “only” 21%, while the S&P500 is up 28%.
Even gold, silver, and bonds cannot keep up with the world’s most capitalized cryptocurrency: on the contrary, this asset class has suffered from the quantitative easing policies of 2020 and 2021 and marking negative returns today as far as in the last 3 years of trading.
Presenting this data on X to the public is none other than Michael Saylor, executive chairman and founder of Microstrategy as well as a deep fan of Bitcoin’s underlying ideology.
#Bitcoin is Winning. pic.twitter.com/xmZ3cevqRw— Michael Saylor⚡️ (@saylor) September 30, 2023
It is clear that Bitcoin is increasingly gaining a position of merit among the most popular and capitalized assets on the globe, achieving capitalization in excess of $500 billion and scoring extraordinary performances at certain historical periods.
While we have to admit that the pitfalls of the crypto world are endless and that adversities in the marketplace put fear into even the most experienced, there is nonetheless to recognize what has been the growth of a digital currency that until 10 years ago was still considered a nerdy game.
As of today, however, we can see that there are those who have preferred Bitcoin to Nasdaq and the S&P500 and that more and more people are likely to start taking an interest in cryptocurrency, especially on the speculative side.
Nasdaq and S&P500 better than Bitcoin in the past 6 months: what is happening?
Although Bitcoin has outperformed the U.S. Nasdaq and S&P500 indexes over the past 3 years, if we shorten the time horizons we can observe an entirely different situation.
In fact, if we take the last 6 months of trading in the markets as a reference, we can see how the two stock baskets have done better than the cryptocurrency, which has faced a series of problems with U.S. regulators.
In detail, Bitcoin fell from $28,200 in April 2023 to the current $28,100, registering -0.3 percent.
Several factors, including the SEC‘s court cases and the filing of several applications by hedge funds for a spot ETF caused high volatility, especially during the summer period.
Instead, the Nasdaq rose from $12,189 in April to the current $13,219 with a total increase of 8.45%.
At the same time, the S&P500 has also done better than Bitcoin, registering a +3.97% over the past 6 months with index prices rising from $4,124 to $4,288.
In all of this there is also the fact that in the past month the indexes have fallen 5.72% and 4.64% respectively while the cryptocurrency has risen more than 9%.
In fact, if we remove the last month from the observations, we would see a very disappointing performance for digital gold compared to its equity counterparts.
Hence, what has been happening in the last few months to Bitcoin and why is it going against the performance of the last 2 1/2 years? It is simply going through a very complex transition period, in which more conservative investors most likely decided to opt for less risky instruments.
On the other hand, with high rates and markets squeezed by restrictive central bank policies, it is good enough in itself that the Nasdaq and the S&P500 have been in the green for the past 6 months, while it is clearly normal that highly speculative assets such as Bitcoin have lost ground.
Bitcoin price analysis: bull run coming in Q1/Q2 2024 with first spot ETF approvals
Bitcoin opened the day today putting a smile on the faces of traders who woke up to the digital currency sneaking back above $28,000, raising hopes for a return to the bullish market that has been on standby for nearly 2 years, all while Nasdaq and S&P500 register flat premarket changes.
Prices are momentarily rising but must contend with an RSI that is approaching the overbought zone and the next $30,000 and $31,500 resistances that hamper growth in the coming days.
It is probably still too early to cry bull run and we may remain compressed within the $30,000-$25,000 range for a few more weeks.
Despite the very mixed performance over the past 6 months, things are about to change and we may be close to a reversal period.
The factor most likely to usher in a bull market for Bitcoin and the rest of the cryptocurrencies is surely the approval of the first spot ETF by the US Securities and Exchange Commission.
The federal agency is delaying its decisions by trying to buy time, but everyone knows that it will most likely be forced to accept applications from the various funds that have proposed themselves as issuers for these financial instruments.
The SEC in recent months has lost several small battles against Ripple, Coinbase, and Grayscale and may be forced by a federal judge to accept an ETF given the lack of a plausible explanation for any rejection.
In this regard, looking at the following table proposed by Bloomberg, which shows the different deadlines for each of the ETFs proposed by the different companies, we can see that the majority of them have 15 March 2024 as their final date for approval.
Only ARK with its “ARK 21Shares Bitcoin ETF” has as its final deadline the early date of January 10, 2024.
Many think that in that period, January to March, we will see the first approval of a spot ETF, the SEC being breathing down our necks and lacking arguments to shoot down claims in court.
Add to this the fact that in April we will see the fourth halving of Bitcoin, which will lead to miners seeing the premium for each block validated in the chain halved and will most likely indirectly lead to price growth for the asset (at least according to what has happened in the past).
In addition, May 2024 is expected to see the first slowdown in the Fed’s restrictive policies, which could finally lower interest rates on government bonds bringing some relief back to the markets.
Here, these 3 factors added together make us think that starting in Q1 or Q2 2024 we will finally see the restart of the bullish market for Bitcoin.