Key Points
- Bitcoin’s price is up 124% year-over-year, outperforming nearly every major asset class, with its market dominance rising to 56%.
- Institutional adoption is accelerating, with bitcoin ETPs gaining over $19 billion in new inflows from hedge funds, RIAs, insurance companies, and pension funds through August 2024.
Bitcoin Fundamentals Show Strong Growth
According to a mid-September 2024 report by VanEck, Bitcoin continues to demonstrate robust performance and growing institutional interest. Despite a recent 21% correction from its March peak, Bitcoin’s year-to-date performance (+36% as of September 16) surpasses most major asset classes. The report highlights that Bitcoin’s price has increased by 124% year-over-year, reaching $58,584, while its market dominance has grown by 15% to 56% of the total cryptocurrency market capitalization.
Institutional Adoption Accelerates
VanEck’s research indicates a significant uptick in institutional adoption of Bitcoin. Since January 2024, bitcoin Exchange-Traded Products (ETPs) have attracted over $19 billion in new inflows from various institutional investors, including hedge funds, Registered Investment Advisors (RIAs), insurance companies, and pension funds. Notably, hedge fund holdings of bitcoin ETPs grew by 38% in Q2, while RIA holdings increased by 4%.
The report suggests that the slower adoption by full-service national brokerages, or ‘Wirehouses,’ may be due to the lack of updated macro model portfolios that include Bitcoin. However, some managers are increasingly marketing and distributing “all in one” or model portfolios that incorporate Bitcoin, potentially accelerating market share shifts towards independent advisors and vertically integrated models.
Sovereign Adoption and De-dollarization Trends
VanEck’s analysis also points to a growing trend of sovereign nations adopting Bitcoin for monetary and trade purposes. Seven nations are now mining Bitcoin with direct support from their national governments, with three new entrants in 2024 (Ethiopia, Kenya, and Argentina). This trend is seen as a key indicator of the global shift towards de-dollarization, with potential implications for Bitcoin’s role as a global reserve asset.
The report concludes by emphasizing Bitcoin’s long-term growth drivers, including the increasing need for decentralized, censorship-resistant networks, growing institutional adoption, and rising sovereign involvement in mining and cross-border trade. These factors, combined with Bitcoin’s appeal to younger generations and its potential as a hedge against inflation and currency devaluation, reinforce VanEck’s conviction in the long-term bull market for Bitcoin.
