Bitcoin will be the best performing asset class in Q1 2023
Bitcoin’s (BTC) 2023 momentum as part of its bid to exit last year’s crypto winter has resulted in the digital asset outperforming other investment products, despite a gloomy economic outlook.
In particular, Bitcoin has emerged as the top asset class in Q1 2023, with gains of around 70%, making it the digital currency’s best quarter since Q1 2021, according to Bloomberg date March 31,
It is worth noting that during the first quarter of 2021, Bitcoin increased approximately 103% at the beginning of the last bull run. The asset’s most recent quarterly returns have placed the digital currency ahead of big names like the S&P 500 (5.5%), the Nasdaq 100 (19%) and the iShares Core US Aggregate Bond ETF (2.2%).
Elsewhere, Bitcoin has also undercut gold, with the precious metal recording gains of 9.5% in the first three months of 2023, while silver returns 0.3%, according to data obtained by Finbold on March 31.
Investors flock to Bitcoin
Amid the quarterly gains, investors appear to be flocking to Bitcoin and Ethereum (ETH), which has seen open interest rise nearly 430% year-to-date as of March 31. Bitcoin’s ability to lead the market in gains has also revived optimism, with nearly 1,000 new coins entering the space in 2023 alone.
However, market experts believe that Bitcoin’s performance should not come as a surprise, noting that the asset began to build the foundations for a possible rally in late 2022.
“It’s not a surprise at all. <...> All signs pointed to a strong price floor starting last November, and it was only a matter of time before either the liquidity narrative changed (which it did in early January) or long-term investors saw a store of value opportunity (which also appears to have happened),” said Noelle Acheson, author of the cryptocurrency book the Crypto is macro now.
Bitcoin’s gains have also coincided with the renewed possibility of further rate hikes as the Federal Reserve moves to tame soaring inflation. The cryptocurrency has also taken advantage of the turmoil in the banking sector as investors look to the asset as an alternative to centralized money systems following the collapse of Silvergate Capital, Signature Bank and Silicon Valley Bank.
In this vein, Bitcoin’s resilience can be attributed to its legitimate fundamental improvements and its unique role as a bearer asset in an era of skepticism about bank deposits and increased central bank bailouts.
Part of the impact of the banking crisis was highlighted by a March 21 Finbold report that indicated five leading US banks lost a cumulative market value of $108.92 billion in 2023 alone, while Bitcoin added around $219.86 billion.
Bitcoin price analysis
After days of rally, Bitcoin faces resistance at the $30,000 position, trading at $27,928 with daily losses of around 2.5%.
Bitcoin now controls a market capitalization of around $540 billion after a supply of over $200 billion by 2023.
