Bitcoin’s Best Quarter in 2 Years Beats All Major Indices
The price of Bitcoin jumped more than 70% in the first quarter. Photo illustration of Fortune
After a rocky end to 2022, Bitcoin turned its fortunes around in the first three months of the year, skyrocketing 73% to outperform all major US indices.
The most popular cryptocurrency started the year around $16,000, but ended the quarter around $28,500, its best quarterly performance in two years, according to CoinDesk. The cryptocurrency was trading at $28,000, down 1% on Monday morning, according to CoinMarketCap data.
Bitcoin outperformed all major indexes in a quarter that saw stocks bounce back. The S&P 500 was up 7%, and the Dow Jones rose 0.4%, while the Nasdaq led the pack with a 17% gain, its best quarter since the fourth quarter of 2020, according to CNN Business. Gold was also up 7% in the first quarter.
The second leading cryptocurrency, Ether, jumped 50% in the same period and could see further gains following the Shanghai update to the code later this month.
Part of the reason for Bitcoin’s recent success is a restoration of its “store-of-value” properties, according to a Friday research report from crypto exchange Coinbase. Investors tend to put money into stores of value like gold when markets fall.
The correlation with the S&P 500 has fallen from a peak of 70% in May 2022 to 25% on March 30, just before the quarter ended, according to Coinbase. Because the digital currency acts as an alternative to the traditional financial sector, it has benefited from investor jitters following the failure of Silicon Valley Bank and Signature Bank last month.
After holding just 43.9% of all crypto market share at the end of February, by the end of March, Bitcoin accounted for 47.7% of the digital asset market, according to Coinbase.
Last week, the cryptocurrency saw $8.8 million in inflows, while Ethereum saw outflows of about $2 million, according to a research note from digital asset investment and trading group CoinShares.
Another factor boosting both stocks and Bitcoin is investor hopes that the Federal Reserve will reverse course and cut interest rates. The Fed raised interest rates by a quarter of a percentage point after its March meeting, and some investors believe a rate cut could be imminent due to signs of recession.
Still, after the Fed’s March meeting, Chairman Jerome Powell said a rate cut was unlikely for the rest of 2023.
