With a 72% gain, Bitcoin closed out its best quarter since the three months ended March 2021, when it surged some 103%, Bloomberg data show. That vastly outstripped the S&P 500’s 7% year-to-date advance, the Nasdaq 100’s 20.5% uptick and the iShares 20+ Year Treasury Bond ETF’s 6.8% jump.
Long-time participants note that volatility is expected — and is even part of the attraction to investors in the relatively embryonic asset class. Bitcoin burst onto the mainstream consciousness with a more-than 1,000% annual gain in 2017, only to post a 74% drop the following year in what became known as a crypto winter. Then after three consecutive annual increases, it tumbled 64% last year amid a series of industry scandals and bankruptcies.
“For many crypto market observers, it’s not at all a surprise,” said Noelle Acheson, author of the “Crypto Is Macro Now” newsletter, of this year’s rally. “All the signs were pointing to a strong price floor starting last November, and it was just a matter of time before either the liquidity narrative changed (which it did in early January) or longer-term investors saw a store-of-value opportunity (which seems to have also happened).”
YTD Price Change (Through 3/31/2023)Bitcoinabout 70%Nasdaq 10020.5%STOXX Europe 600 Price Index EURabout 8%S&P 5007%iShares Core U.S. Aggregate Bond ETF2.7%WTI Oil-5.9%
Market-watchers are at odds over the exact causes behind Bitcoin’s big bounce. The coin started 2023 coming off its second-worst year ever. Partly, some say, it might have been recovering from such a bruising performance. Yet many more have in recent weeks pointed to its origins as reasons why it’s back in demand: amid tremors in the global banking sector, the token can act as a sanctuary given that it’s independent of central banks, they argue.
“Most people’s knee-jerk would’ve said Bitcoin should do terribly because markets are under pressure or strain,” said Peter van Dooijeweert at Man Solutions. “But actually if you think about the Bitcoin bugs — the people who love Bitcoin — they love the idea of a non-fiat currency — like this is the outside-the-US-dollar, outside-of-the-banking-system-type thing.”
Matthew Sigel, head of digital assets research at VanEck, agrees. “Bitcoin has remained resilient because of legitimate fundamental improvements and its unique role as a bearer asset in a period of skepticism about bank deposits and more central bank bailouts,” he said in an interview.