Bitcoin has outperformed most asset classes over the past 12 months; however, the recent price drop has left many investors “spooked,” according to a report by asset management firm VanEck on September 19.
The spot price of BTC has increased by about 124% since September 2023, and Bitcoin has gained relative market share among cryptocurrencies. As of September 20, Bitcoin's market capitalization was about $1.25 trillion, accounting for 56% of the total cryptocurrency market capitalization, up about 15% from a year ago, according to VanEck.
The firm predicts that Bitcoin's “long-term bull market” will continue for the foreseeable future, noting that “Bitcoin's adoption as an investment vehicle today is no longer driven by the same dynamics as in 2023.”
Previously driven largely by retail, BTC adoption increased in 2023 thanks to “inscriptions,” which VanEck describes as “an innovation that allows users to store media files directly on the Bitcoin blockchain.”
The report also found that the decline in the popularity of the inscription in 2024 led to a drop in transaction fees on the Bitcoin network of about 52% compared to the same period last year.
“Bitcoin's price rise this year can be better explained by its growing acceptance as a currency: a means of storing and transferring value.”
In January, US regulators authorized the listing of spot Bitcoin ETFs, which now hold about $55 billion in net assets.
Since then, asset advisors have adopted BTC ETFs “faster than any new ETF in history,” according to Matt Hougan, chief investment officer at asset management firm Bitwise.
“Bitcoin’s long-term growth is driven by strong and enduring big themes: growing demand for decentralized, censorship-resistant networks, growing institutional adoption, and growing government involvement in mining and cross-border trading,” Matthew Sigel, director of digital asset research at VanEck, reported.
The biggest losers over the past 12 months have been Bitcoin miners, who have had a “tough year” in 2024. The Bitcoin network’s “halving” event in April was a major factor. Every four years, the number of BTC mined per block is cut in half; this year’s event reduced the mining reward from 6.25 BTC to 3.125 BTC per block.
This has put pressure on BTC miners’ fundamentals. VanEck said:
“Bitcoin Hashprice, an industry unit of profit used to measure revenue earned for every trillion cryptographic hash calculations per second, fell 97% year-over-year.”
