Digital Assets Outperform Equities In 2023

According to CoinDesk, the digital assets sector has continued to outperform the stock market this year, with bitcoin (BTC) leading the charge, as noted by broker Canaccord in a quarterly report on Monday. The report highlighted that bitcoin, the world's largest cryptocurrency, finished the last quarter up around 140% year-on-year, significantly outperforming ether (ETH), which gained about 60%, and the S&P 500 stock index, which rose almost 30% over the same period. Canaccord suggested that if bitcoin follows its historical patterns, it tends to rally 6-12 months following its halving event and reach new highs 2-6 months later. This implies that a potential rally could start between now and April. The report also noted that the Federal Reserve's 50 basis points interest rate cut triggered a move higher for both equities and digital assets. The report stated, "We think the most healthy reaction for crypto's long-term future in a scenario like this would be a decline in BTC," given the lesser need for an inflation hedge. It also mentioned a rise in ether and other digital assets alongside risk equities, as "investors become more willing to underwrite longer-term growth and innovation." Despite this, bitcoin is still performing like other risk assets and is reacting positively to the "lower-rate environment," according to analysts led by Michael Graham. The report also mentioned that BTC's correlation to risk assets is currently 0.4, down from all-time highs of 0.6 in June 2022. While the timing of any future rate cuts remains unclear, beneficial supply and demand dynamics following the bitcoin halving in April could add to the positive tailwinds from exchange-traded funds (ETFs). Additionally, the stablecoin supply grew by 7% in the third quarter, the report noted.