Bitcoin (BTC) Outshines All Major Asset Classes in the Past Year, Promises a Bright Future: VanEck

Bitcoin is up by 141% in the last 12 months

Bitcoin has outperformed every major asset class over the past year, recent data from American investment management firm VanEck shows.

Over the past 12 months, Bitcoin has risen by 141%. Source: Brave New Coin Bitcoin Liquid Index

As of September 26th 2024, Bitcoin has seen its price surge by 141% over the past year – far more than traditional assets like Gold or the S&P 500.

According to the VanEck report, a key factor driving this rise is the surge in crypto venture capital (VC) investments. Over the past year, crypto VC flows have jumped by 87%. Bitcoin’s market capitalization now stands at approximately $1.25 trillion – up by 15% since last year, the report noted.

Bitcoin is transitioning into a more established role as a “store of value and a tool for wealth transfer”, rather than just a speculative asset. This shift may be bolstering its long-term stability but it also presents challenges, especially as the network’s scalability and energy consumption issues persist, the report said.

In the report, Matthew Sigel, Digital Assets Research head at VanEck, stated that “Bitcoin’s adoption today is being driven by different forces than in 2023, when retail demand and viral innovations like inscriptions played a major role.”

Institutions and Nations Adoption Are Driving Bitcoin’s GrowthSince the U.S. authorized the listing of spot Bitcoin exchange-traded funds (ETFs) earlier this year, institutional demand for these products has surged. As of September, Bitcoin ETFs have gathered net assets of around $55 billion, and financial advisors have embraced these funds faster than any other new ETF in history.

The involvement of seven countries in Bitcoin mining, including recent entrants Ethiopia, Kenya, and Argentina, will signal a broader global trend toward de-dollarization, with countries exploring Bitcoin as a potential tool for cross-border trade, the VanEck report noted.

While Bitcoin continues to rally, miners are facing a more difficult situation. The April 2024 “halving” event halved mining rewards, dropping them from 6.25 to 3.125 BTC per block. According to VanEck, the hashprice, a measure of revenue earned per unit of computational power, has crashed by 97% over the past year.

Fed Rate Cuts and Election Could Boost BitcoinThe Federal Reserve’s rate cuts and the upcoming U.S. elections are the key factors that will influence Bitcoin’s future performance the most, VanEck said. Continued monetary easing could boost demand for Bitcoin as investors seek higher returns in a low-yield environment, the VanEck report predicts.

On the political front, Bitcoin stands to gain no matter if Kamala Biden or Donald Trump wins the upcoming U.S. presidential election. A Harris presidency could drive Bitcoin adoption by spurring interest in decentralized financial systems as a response to stricter regulations and anti-business policies, the VanEck report suggests.

Meanwhile, a Trump administration is expected to create a more favorable landscape for Bitcoin through deregulation, fostering an environment where the cryptocurrency and broader crypto ecosystem could thrive. Both scenarios suggest that Bitcoin will continue to rise in a politically charged environment, the report said.

Bitcoin’s long-term growth is assured, citing global trends like the rising demand for censorship-resistant networks, growing institutional adoption, and increasing involvement of sovereign nations in Bitcoin mining and trade, the report concluded. By 2050, Bitcoin’s value could skyrocket to $2.9 million per coin, predicting its bright future as a key player in the global financial system, VanEck predicts.