Sat 21 September 2024 ▪
4
min reading ▪ acc
In a global economic context marked by uncertainty, Bitcoin continues to stand out with its exceptional performance. In 2023, the iconic cryptocurrency outperformed almost all other asset classes according to VanEck’s report, confirming its central role in the global financial landscape. This improvement, fueled by growing institutional adoption and the emergence of financial instruments such as Bitcoin ETFs, extends beyond individual investors. Institutional funds and asset managers now consider it a trusted investment vehicle.
Bitcoin on an inexorable pace
Bitcoin will increase by 124% in 2023. It has outperformed almost all other asset classes. According to VanEck’s report, this rise has allowed Bitcoin to gain a growing market share within the crypto ecosystem. “Bitcoin now represents 56% of the total cryptocurrency market capitalization, up 15% from last year,” the report said. This growing dominance is fueled by increased institutional adoption, with major players in the financial sector such as ETFs (Exchange-Traded Funds) playing a key role in this rise.
Institutional adoption of Bitcoin has been one of the engines of its growth. In January 2024, US regulators gave the green light to the first listing of Bitcoin ETFs, attracting institutional investors at an unprecedented rate. Today, these ETFs hold approximately $55 billion in assets, further cementing Bitcoin’s position as a must-have asset for wealth managers. In fact, this institutional success is in stark contrast to previous years when adoption was primarily driven by retail investors.
Miners in trouble, but positive long-term outlook
However, this euphoria surrounding Bitcoin does not apply to all players in the ecosystem. Bitcoin miners in particular are having a hard time. VanEck’s report highlights that 2024 has been a “terrible” year for miners, particularly due to the halving of mining rewards during the April halving. “Rewards increased from 6.25 BTC to 3.125 BTC per block, significantly reducing the profitability of miners,” the report said. This drop led to a 97% drop in the Hashprice index, which measures miners’ income.
Despite these challenges, Bitcoin’s long-term outlook remains positive, according to VanEck. The report highlights several megatrends that are expected to continue to fuel the growth of cryptocurrencies: growing demand for decentralized networks, growing institutional adoption, and greater state involvement in mining and cross-border trading.
While Bitcoin miners are currently struggling, the long-term dynamics are clearly tipping in favor of the cryptocurrency bull market. Rapid institutional adoption, growing sovereign engagement, and the strength of Bitcoin’s infrastructure continue to support sustained demand.
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A graduate of Sciences Po Toulouse and holder of the blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I made a commitment to raise awareness and inform the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and take advantage of the opportunities it offers. Every day I try to provide an objective analysis of current events, decipher market trends, convey the latest technological innovations and put into perspective the economic and social problems of this ongoing revolution.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.