Bitcoin had a very bad third quarter of 2021, falling 11.1% over the previous three months, trailing only long-term treasuries, which suffered an 11.9% loss during the same time period. This negative result happened in spite of a number of encouraging developments in the cryptocurrency world, such as favourable court decisions, macroeconomic shifts, discussions about US debt, and continued efforts to have a Bitcoin spot ETF approved.
Not all asset classes had losses in the third quarter, including bitcoin. Almost all asset classes experienced large declines, including gold, precious metals, U.S. stock markets, and real estate. With a 15.5% gain, commodities were one of only four assets to post a quarterly profit, followed by cash with a 1.3% increase.
Expert opinions on the underlying causes of Bitcoin’s poor performance and future direction vary. Greg Cipolaro, the global head of research at NYDIG, blames it to persistently high inflation, rising interest rates, worries about a recession, and a pattern of Bitcoin’s subpar Q3 results. Nevertheless, Cipolaro thinks that this underwhelming result might be a sign of things to come in the historically great Q4 for Bitcoin.
Peter St. Onge, an economist at the Heritage Foundation, claims that recent events in the Middle East may have caused increases in inflation, which is why Bitcoin‘s performance has been sluggish. Despite the recent decline, Bitcoin still shows a year-to-date return of 63%, making it one of only four assets to register double-digit gains. It still outperforms its nearest rival, U.S. Large Cap Growth Funds, by a factor of more than two, making it still a desirable investment option.