Bitcoin Outperforms Nearly All Asset Classes Over the Past Year, Says VanEck

blockchain, bitcoin, bit coin

Table of Contents

Main Points

  • Bitcoin has outperformed nearly all asset classes over the past 12 months, despite recent price drops.
  • Bitcoin’s market capitalization has grown, now representing about 56% of the entire cryptocurrency market.
  • VanEck predicts a long-term bullish trend for Bitcoin driven by institutional adoption and cross-border use cases.
  • Miners have experienced significant losses due to the Bitcoin halving in April 2024, with hash price revenue down by 97% year-on-year.

Bitcoin’s Remarkable Performance Amid Challenges

In its latest report published on September 19, asset management firm VanEck noted that Bitcoin has outperformed nearly every other asset class over the past 12 months. This comes despite some recent downward price movements, which VanEck attributes to temporary market fluctuations that have left some investors feeling apprehensive. The report details how Bitcoin has increased by approximately 124% since September 2023 and is now more dominant in the cryptocurrency space than ever before.

The Growth of Bitcoin’s Market Cap and Influence

According to VanEck’s research, Bitcoin’s market capitalization as of September 20, 2024, stands at around $1.25 trillion, making up approximately 56% of the total cryptocurrency market. This is a significant increase from the previous year when Bitcoin’s dominance was about 15% lower. Such a rise indicates that Bitcoin’s presence in the market is growing not only in absolute terms but also relative to other cryptocurrencies.

This growing influence is attributed to the broader adoption of Bitcoin as a secure and decentralized store of value. While in previous years, Bitcoin’s adoption was driven largely by individual investors, 2023 saw a shift towards more institutional adoption. The VanEck report emphasizes that this trend is likely to continue, driven by factors beyond retail interest.

The Shift in Bitcoin’s Use Case

VanEck also notes that Bitcoin’s role in the global financial ecosystem is evolving. In 2023, a viral innovation called “inscriptions” allowed media files to be stored directly on the Bitcoin blockchain, creating a new wave of interest. However, in 2024, the popularity of inscriptions waned, and this contributed to a decrease in Bitcoin network transaction fees by approximately 52% year-on-year.

Despite this, VanEck predicts that Bitcoin’s future price growth will be fueled more by its adoption as a store of value and a medium of value transfer. With the shift away from inscriptions, Bitcoin is increasingly being used as a secure, decentralized, and censorship-resistant asset.

Institutional Interest and Long-Term Growth

Matthew Sigel, head of Digital Asset Research at VanEck, explained that Bitcoin’s long-term growth is supported by strong, sustainable “megatrends.” These include rising demand for decentralized, censorship-resistant networks, greater institutional adoption, and increasing state involvement in Bitcoin mining and cross-border transactions.

Sigel believes that institutional investors are beginning to recognize the resilience and potential of Bitcoin, which is further strengthening its role in the global financial system. Additionally, countries have shown increased interest in Bitcoin mining, which could further propel its adoption and network security in the long term.

Challenges for Bitcoin Miners in 2024

While Bitcoin’s performance has been impressive, it has not come without challenges, particularly for miners. The April 2024 halving event, in which the reward for mining Bitcoin blocks was reduced from 6.25 BTC to 3.125 BTC, has had a profound impact on miners’ revenue. The halving occurs every four years and is designed to control the supply of new Bitcoins entering circulation, a process that ensures scarcity and long-term value.

The report notes that Bitcoin miners suffered their worst year in 2024, with significant reductions in profitability. VanEck’s data shows that the hash price—a metric that measures the revenue miners earn from computing a trillion cryptographic hashes per second—has dropped by 97% compared to the previous year. This decrease in profitability has made it difficult for many miners to maintain operations, potentially leading to further consolidation in the mining industry.

Bitcoin’s Long-Term Prospects: A Bullish Outlook

Despite the challenges faced by miners and the temporary price drops, VanEck maintains a long-term bullish outlook on Bitcoin. The report points to the continued growth of institutional interest and the increasing use of Bitcoin for cross-border transactions as key drivers of future demand. Moreover, with each halving, Bitcoin’s scarcity increases, reinforcing its role as a store of value akin to digital gold.

VanEck also highlights Bitcoin’s resilience during periods of economic uncertainty, noting that its decentralized nature makes it less vulnerable to the risks faced by traditional financial systems. As governments and central banks around the world navigate inflation and potential recessions, Bitcoin could become an even more attractive asset for both institutional and individual investors.

A Strong Future Despite Challenges

VanEck’s report on Bitcoin’s performance over the past 12 months paints a picture of a digital asset that is continuing to grow and evolve. While the challenges faced by miners in 2024 have been significant, the overall trajectory of Bitcoin remains positive. Its increasing market dominance, coupled with growing institutional adoption and state involvement, suggests that Bitcoin’s long-term prospects are strong.

Looking ahead, Bitcoin’s future will likely be shaped by its use as a store of value and a medium for cross-border transactions. As institutional investors continue to embrace the asset, and as governments increasingly engage with the Bitcoin network, the digital currency’s place in the global financial system seems more secure than ever.

Search

About Us and Media

Blockchain and cryptocurrency media covering and exposing the practical application development on the blockchain industry and undiscovered coins.

Featured

Recent Posts

Weekly Tutorial

Sign up for our Newsletter

Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit