Bitcoin Projected to Outpace Traditional Assets in 2023, Says Kaiko Research
Summary:
Bitcoin (BTC) is predicted to conclude this year ahead of traditional assets, according to Kaiko Research. Despite fierce industry competition and stringent macroeconomic conditions, the digital currency increased more than 160% this year. The SEC will rule on allowing Bitcoin spot trading through ETFs in early January, with many Wall Street firms waiting for approval. The endorsement could spur Bitcoin prices, with BlackRock planning to seed its product with $10 million. The year also saw a reversal in Bitcoin's correlation with the Nasdaq 100, previously determined by macroeconomic factors, US dollar performance, and market trends.
As we approach the end of the year, Kaiko Research speculates that Bitcoin (BTC) will outdo all major conventional assets. Despite intensifying challenges within the industry and strict macroeconomic conditions, the digital currency has seen an over 160% increase this year. Only a handful of companies, including NVIDIA Corp (NVDA) that saw a 241% jump this year, have performed better than Bitcoin.
Inspecting Bitcoin's value over the year, Kaiko analysis reveals three phases. From March to October, Bitcoin largely fluctuated between $25,000 and $30,000, hitting multi-year lows as it dropped sharply in the middle of 2023. However, after BlackRock's application for a Bitcoin spot exchange-traded fund (ETF) on June 15, the virtual currency's market value skyrocketed past $40,000.
Bitcoin holds one of the top Sharpe Ratios among major assets this year, despite a rather uneventful mid-year. The cryptocurrency's strong performance is only outpaced by semiconductor giant Nvidia, which saw its shares more than double from January to May due to rising interest in AI.
The United States Securities and Exchange Commission (SEC) is anticipated to decide in early January on whether to permit spot trading of Bitcoin through ETFs. Major Wall Street firms such as Fidelity, WisdomTree, ARK and 21Shares, and VanEck are among those awaiting approval. The sanctioning of this investment approach will likely escalate Bitcoin prices and liquidity, with BlackRock reportedly planning to initialize its product with $10 million.
Kaiko's study also highlights a shift in Bitcoin's correlation with the Nasdaq 100 stock market index. Bitcoin is often characterized as an inflation hedge, similar to an online version of gold, but its worth was primarily dictated by macroeconomic elements, US currency performance, and stock market shifts.
This correlation began to see a decline this year, with BTC rallying and a reversal in the later part of the summer when it stalled under $30k. The quickest decorrelation occurred recently when BTC passed the $40k mark. It remains uncertain whether this decorrelation will persist as equity indexes, including the Nasdaq 100, continue to record-breaking highs," Kaiko reported.
Published At
12/23/2023 7:23:04 PM
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