Bitcoin (BTC) is still outperforming the top traditional financial assets so far in 2020 – even after a dour performance this month.
At time of writing (10:00 UTC), bitcoin is trading around $9,170, representing a 27.8% gain on a year-to-date (YTD) basis, according to CoinDesk’s Bitcoin Price Index.
Meanwhile, gold and the U.S. Dollar Index, which tracks the value of the greenback against major currencies, are reporting 16% and 5.4% gains for 2020, respectively. The S&P 500 index and oil prices are in the red YTD at -5.5% and -34.22%, respectively, as per data source Skew.
While bitcoin’s YTD performance looks impressive, on a monthly basis the cryptocurrency is being outshone by most of the other assets included in the chart.
At press time, bitcoin is down over 3% from the opening price of $9,444 observed on June 1, having rallied by 34% and 9.5% in April and May, respectively.
“We are in a post-halving price action lull, but investor and on-chain activity has been strong,” said Kyle Davies, co-founder and chairman at Three Arrows Capital.
Bitcoin underwent its third mining reward halving on May 11. The event was expected by some to accelerate price gains; however, strong buying pressure has remained elusive so far, with the cryptocurrency restricted largely to the narrow range of $9,000 to $10,000 since mid May.
Investors, however, continue to pour money into bitcoin-based exchange-traded instruments like Grayscale’s Bitcoin Trust (GBTC), the largest by assets under management (AUM).
“Grayscale saw record subscriptions of 19,000 bitcoin in the latest 2 week period ending 24-Jun,” said Davies, whose firm is the biggest public shareholder in GBTC. In May, the trust accumulated 1.5 times the total of coins mined since the May 11 halving.
Grayscale is a fully owned subsidiary of Digital Currency Group, CoinDesk’s parent firm.
Onchain metrics are also painting a long-term bullish picture. For instance, the percent of bitcoin’s circulating supply that has not moved in at least 12 months reached a record high of 61.59% on Monday. The figure surpasses the previous lifetime high of 61.13% seen in January 2016, according to data provided by the blockchain intelligence firm Glassnode.
“The data shows that we are in a period of sustained HODLing. The last time the number of coins last active 1+ years ago exceeded 60% was in early 2016, just before the price started increasing ever-more-rapidly leading up to the bull run to $20K,” analysts at Glassnode said in a weekly analysis.
Other on-chain activity is also picking up pace due to the recent explosive growth of decentralized finance (DeFi). “Bitcoin tokenized on Ethereum has passed 11,000 (more than $100 million) and fees on Ethereum’s network have reached record highs due to increased tether and Defi transactions,” said Davies. “This will eventually impact market prices.”
While investor flows and on-chain metrics are supportive of stronger gains in bitcoin, seasonal patterns favor a minor correction.
As can be seen, bitcoin has posted losses in the third quarter in four out of the last six years. On most occasions, the negative third-quarter performance is preceded by stellar gains in the April to June period.
Disclosure: The author holds no cryptocurrency assets at the time of writing.