In the first six months of 2024, bitcoin (BTC) outperformed major US indices. In a year with many positive events for the digital currency, the increase was, so far, 60% in its price.
For their part, the S&P500 and the Nasdaq, stock indices listed on the stock exchanges of the aforementioned North American country, registered increases of 11.24% and 12.15%, respectively, so far this year. These indices belong to the traditional financial system and represent two of the financial assets most operated by investors, institutions and corporations.
The S&P500 brings together 500 leading companies from different US industry sectors, while the Nasdaq replicates the actions of the 100 most relevant technology companies in the same country. Comparing the figures of its profitability with that of BTC, bitcoin rose five times more.
This information is seen more clearly in the following graph provided by TradingView. In green, you can see the price action of the digital currency, with a much higher profitability . In the same image, you can see the representation of the price of the SP&500 and Nasdaq indices and their current, much lower returns.
In addition, the graph adds another of the most traded US stock indices: it is the Dow Jones Industrial Average, which brings together and averages the 30 most important industrial companies in the US. Finally, it also incorporates gold, the raw material most valued on the planet.
Green, bitcoin; orange, gold; purple, the Dow Jones index; red the SP500; and light blue, the Nasdaq.
Why did the price of bitcoin grow this way in 2024?
This year was very peculiar for BTC. And there were a series of events that could be the "culprit" for having captured the will to invest in bitcoin and for having increased the adoption of this asset by banks and the traditional financial system.
Interest and confidence in BTC has grown to such a point that during 2024 bitcoin managed to surpass its all-time high even before the halving. In March of this year it reached $73,800.
In the first instance, since the approval and implementation of bitcoin spot ETFs, which occurred in January in the United States, the flow of money directed by companies and investors towards this digital currency has grown.
The arrival of this financial tool and incorporation of digital currency allowed easier and more practical access to a market that, perhaps, many were unaware of or assumed they incurred a greater risk.
Such is the case of BlackRock, a company that on May 29 managed to have the largest BTC ETF in the world with almost 289,000 bitcoin. This amount is equivalent to approximately 20 billion dollars. As well as BlackRock, other companies with their own bitcoin spot funds are attracting new investors.
In turn, Hong KongIt also has its bitcoin ETFs running since this year and, since last week, on the London Stock Exchange instruments based on BTC and ETH, are already listed on the London Stock Exchange.
In addition to this, traditional banks in the US and other countries have reflected their approach to the digital ecosystem this year. Some examples are: JPMorgan, Wells Fargo, PNC, BNB Paribas and Landesbanck Baden-Württemberg.
The “halving effect” could continue to drive the price of bitcoin
The halving, an event that occurs every four years, is another of the relevant events of 2024 that concerns the bitcoin situation and the cryptocurrency ecosystem.
According to the Bitcoin protocol, there will only be 21 million units of BTC. That characteristic makes it a unique asset: infinite BTC cannot be “printed.”
Halving is an automatic process that halves the pre-established BTC reward that miners receive for validating network transactions.
In this way, as the supply of new BTC entering the market reduces and if the demand for bitcoin increases, there would be more users in the ecosystem competing for a smaller amount of BTC issuance. This eventuality would lead to an increase in the value of BTC.
This process has already occurred three other times in the past and was linked to a rise in the price of bitcoin until reaching all-time highs a few months later. If history repeats itself, expect that in the remaining months of 2024 and possibly part of 2025, bitcoin will continue its bullish march toward new highs.
