Digital assets continue to outperform equities this year, the report said.
Canaccord said bitcoin's dominance should decline given the lesser need for an inflation hedge, but it still performs like other risk assets for now.
If bitcoin follows historical patterns post halving a rally could start between now and April, the broker said.
The digital assets sector continues to outperform the stock market this year, with bitcoin {{BTC}} leading the charge, broker Canaccord said in a quarterly report on Monday.
The broker noted that the world's largest cryptocurrency finished the last quarter up around 140% year-on-year (y/y), outperforming ether {{ETH}} which gained about 60% and the S&P 500 stock index, which rose almost 30%, over the same period.
If bitcoin follows historical patterns it tends to rally 6-12 months following the halving, and reach new highs 2-6 months later, meaning a potential rally could start between now and April, the broker said.
The Federal Reserve's 50 basis points (bps) interest rate cut triggered a move higher for both equities and digital assets, Canaccord noted.
"We think the most healthy reaction for crypto's long-term future in a scenario like this would be a decline in BTC," the report said, given the lesser need for an inflation hedge, and a rise in ether and other digital assets alongside risk equities, as "investors become more willing to underwrite longer-term growth and innovation."
Bitcoin is still performing like other risk assets for now, and is reacting positively to the "lower-rate environment," analysts led by Michael Graham wrote.
BTC's correlation to risk assets is 0.4, down from all-time highs of 0.6 in June 2022, the authors wrote.
While the timing of any future rate cuts is unclear, beneficial supply and demand dynamics following the bitcoin halving in April could add to the positive tailwinds from exchange-traded funds (ETFs), the report added.
Stablecoin supply grew 7% in the third quarter, the report noted.
Read more: Bitcoin Could Hit $125K by Year-End if Trump Becomes President, $75K if Harris Triumphs: Standard Chartered
