In a global economic context marked by uncertainty, Bitcoin continues to stand out with its exceptional performance. In 2023, the iconic crypto has outperformed almost all other asset classes according to the VanEck report, confirming its central role in the global financial landscape. This upturn, supported by growing institutional adoption and the emergence of financial instruments such as Bitcoin ETFs, goes beyond retail investors. Institutional funds and wealth managers now see it as a credible investment vehicle.
Bitcoin on a relentless roll
In 2023, Bitcoin has seen a 124% increase. It has outperformed almost all other asset classes. According to VanEck’s report, this increase has allowed Bitcoin to capture a growing market share within the crypto ecosystem. “Bitcoin now represents 56% of the total crypto market capitalization, up 15% from last year,” it can be seen read in the report. This growing dominance is driven by increased institutional adoption, with major players in the financial sector, such as ETFs (Exchange-Traded Funds), playing a key role in this rise.
Bitcoin’s institutional adoption has been a driving force behind its growth. In January 2024, U.S. regulators greenlit the listing of the first Bitcoin spot ETFs, attracting institutional investors at an unprecedented pace. These ETFs now hold approximately $55 billion in assets, further cementing Bitcoin’s position as a go-to asset for wealth managers. Indeed, this institutional success is in stark contrast to previous years, when adoption was driven primarily by retail investors.
Miners in difficulty, but long-term outlook positive
However, this euphoria around Bitcoin does not extend to all players in the ecosystem. Bitcoin miners, in particular, are going through a difficult time. VanEck’s report highlights that 2024 has been “terrible” for miners, particularly due to the halving of mining rewards during the April halving. As such, “Rewards fell from 6.25 BTC to 3.125 BTC per block, significantly reducing miner profitability,” the report states. This decline led to a 97% drop in the Hashprice index, which measures miner revenue.
Despite these challenges, the long-term outlook for Bitcoin remains positive, according to VanEck. The report highlights several megatrends that should continue to support crypto’s growth: increasing demand for decentralized networks, growing institutional adoption, and increased government involvement in mining and cross-border trade.
While Bitcoin miners are currently struggling, the long-term momentum seems to be clearly tilting in favor of a bull market for the crypto. Rapid institutional adoption, growing sovereign involvement, and the strength of Bitcoin’s infrastructure continue to fuel sustained demand.
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