Bitcoin was the best-performing asset class in 2024, as new exchange-traded funds heralded more widespread adoption and hopes for deregulation under a new presidential administration lifted the digital asset to record levels.
But owning cryptocurrency also came with unpredictability and dizzying volatility, as this month's trading clearly demonstrates. Bitcoin Its price has doubled since the beginning of the year in the $40,000 range, and was last trading near $94,000. ether It has gained nearly 50% year-to-date, most recently trading at around $3,355.
Bitcoin and Ether since the beginning of 2024
The most prosperous period of the year was the weeks following the US presidential elections. By mid-December, the cryptocurrency had risen above $108,000 for the first time, driven by optimism that a victory by President-elect Donald Trump over Vice President Kamala Harris would open the door to greater regulatory clarity and send new money rushing into the sector.
But since then, prices have fallen. Bitcoin is negative for the month, weighed by expectations that interest rate cuts by the Federal Reserve will be implemented at a slower pace than expected. The market also faced a period of profit-taking and pronounced volatility until the end of the year.
The year began with a strong boost in confidence following the launch in January of new ETFs containing the cryptocurrency. The funds, which asset managers offer as a simpler way for investors to access Bitcoin, have attracted tens of billions of dollars in cash this year. The iShares Bitcoin Trust ETF (IBIT) now has more than $50 billion in assets.
Microstrategy shares this year
ETFs joined the excitement in July. Demand for these funds has not been as strong as their Bitcoin counterparts, but the category still attracted more than $2 billion in net inflows in less than six months, according to FactSet.
Strong crypto winds also lifted connected stocks to record levels. Bitcoin proxy The precise strategy It has increased by more than 360% since the beginning of the year, while Coinbase and Robinhood They rose by about 43% and 196%, respectively. MicroStrategy shares have been rising since mid-December as the company was added to the Nasdaq 100 index.
However, some mining stocks did not perform well Mara Holding and Riot pads On track for double-digit losses since the beginning of the year. The decline in mining stocks may be a direct result of the Bitcoin halving this year, which led to lower block rewards. Along with transaction fees, this is one of the most important ways miners make money.
— CNBC's Jesse Pound contributed reporting.
