Bitcoin’s performance in the second quarter of 2024 has left analysts disappointed, as it has fallen behind both stocks and bonds in terms of performance. Bloomberg reports that Bitcoin has underperformed global equities, fixed income, and commodities this quarter, with the flagship cryptocurrency losing around 5% from April to mid-June after reaching a high of $73,798 in March.
In the previous quarter, Bitcoin had seen a significant surge of 67% in the three months leading up to March, outperforming traditional asset indexes by a large margin. This surge was largely driven by the excitement surrounding the approval of US Bitcoin exchange-traded funds (ETFs), but according to Noelle Acheson, author of the Crypto Is Macro Now newsletter, that enthusiasm seems to be waning.
Acheson believes that the flow of new funds into Bitcoin ETFs has slowed down, with most recent inflows coming from existing Bitcoin holders rather than new investors. She emphasizes that only new money entering the market will be able to drive the price of Bitcoin up further. Despite attracting over $15 billion in investments, Bitcoin ETFs are now facing a slowdown in new capital inflows.
JPMorgan Chase strategists have noted a shift of funds from digital wallets on exchanges to these new ETF products, estimating a net flow of $12 billion into the crypto market this year, significantly lower than the $45 billion seen in 2021 and $40 billion in 2022. This has led the strategists to express skepticism about the pace of future inflows for the remainder of 2024.
Acheson also suggests that Bitcoin miners may be contributing to the lackluster performance of the cryptocurrency by selling off their holdings to maintain profitability after the April halving, which reduced the block reward from 6.25 BTC to 3.125 BTC. Mining analytics firm Hashrate Index has warned of a significant upward difficulty adjustment for miners in the coming months, while research firm Kaiko has highlighted the potential selling pressure from miners.
Despite the current downturn, some analysts remain optimistic about Bitcoin’s future. CryptoCon has predicted a year-end price target of $91,539, while Galaxy Digital’s Michael Novogratz expects a similar range around $100,000. Cathie Wood of Ark Invest has the most bullish outlook, raising her long-term price target for Bitcoin to an astonishing $3.8 million.
Looking ahead, the impact of spot ETFs on Bitcoin’s market dynamics is a topic of discussion among research analysts at Fineqia.