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Bitcoin Has Outperformed Nearly Every Asset Class in the Past Year – Here’s Why It’s Still a Smart Investment

Over the last 12 months, Bitcoin (BTC) has outshined almost every major asset class, establishing itself as one of the top-performing investments in the financial world. However, a recent dip in price has caused concern among some investors, according to a report from asset management firm VanEck, released on September 19.

Since September 2023, Bitcoin’s spot price has surged approximately 124%, a remarkable growth for any asset. In fact, Bitcoin has increased its dominance among cryptocurrencies, now representing 56% of the entire crypto market, which amounts to a market capitalization of roughly $1.25 trillion as of September 20. This marks a 15% increase from the previous year, showcasing its solid standing despite market volatility.

Why Bitcoin’s Bull Market is Expected to Continue

VanEck believes that Bitcoin’s long-term bull market is set to continue well into the future, driven by forces that are different from what fueled its growth just a few years ago. Back in 2023, Bitcoin’s rise was largely fueled by retail investors and a phenomenon known as “inscriptions”. These inscriptions were a unique innovation that allowed users to store media files directly on the Bitcoin blockchain, creating a viral trend and boosting adoption.

However, this trend has cooled off in 2024. In fact, the decrease in inscriptions has led to a 52% year-over-year drop in transaction fees on the Bitcoin network. While this may sound negative, VanEck points out that Bitcoin’s price appreciation this year is largely due to its growing use as a store of value and a means of transferring value—basically, people are treating Bitcoin more like money rather than just a speculative investment.

Institutional Adoption and ETFs Boost Bitcoin’s Popularity

One of the most significant developments driving Bitcoin’s growth is the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States. Approved by regulators in January, these ETFs have already amassed a staggering $55 billion in assets, according to data from Morningstar. These funds make it easier for institutional investors and financial advisors to invest in Bitcoin, contributing to the rapid mainstream adoption.

Matt Hougan, Chief Investment Officer at Bitwise, remarked that Bitcoin ETFs have been adopted “faster than any new ETF in history,” underscoring just how much demand there is for Bitcoin among wealth advisors and institutional players.

Why Bitcoin’s Future Looks Bright

Bitcoin’s long-term growth is driven by several powerful macro trends, according to Matthew Sigel, head of digital asset research at VanEck. These include the increasing demand for decentralized networks that are resistant to censorship, the rising institutional adoption of Bitcoin, and growing involvement from sovereign nations in Bitcoin mining and cross-border trade.

For new investors, these trends highlight why Bitcoin is more than just a speculative asset—it’s increasingly becoming a crucial part of the global financial system.

The Challenges Faced by Bitcoin Miners

However, not everything in the Bitcoin ecosystem has been smooth sailing. In 2024, Bitcoin miners experienced what can only be described as a “terrible year.” The main culprit was Bitcoin’s April halving, a scheduled event that occurs every four years and cuts the number of new Bitcoins issued to miners by half. In April, the reward per mined block dropped from 6.25 BTC to 3.125 BTC, severely impacting miners’ profitability.

As a result, the Bitcoin Hashprice—a key metric that measures how much revenue miners earn per unit of computational power—has plummeted 97% year-over-year, according to VanEck’s report. This means miners are earning far less from their operations than they were just a year ago.

Why Bitcoin Still Makes Sense for Investors

For those interested in dipping their toes into the world of investing, Bitcoin presents a unique opportunity. Unlike traditional assets, Bitcoin is decentralized, meaning it isn’t controlled by any government or financial institution. This makes it especially attractive in today’s uncertain economic climate, where inflation and central bank policies can heavily impact traditional investments like stocks or bonds.

Moreover, the increasing institutional involvement and regulatory support, such as the approval of Bitcoin ETFs, make Bitcoin more accessible and legitimate than ever before. This lowers the barrier to entry for everyday investors, who can now gain exposure to Bitcoin through familiar financial products like ETFs, without needing to worry about the complexities of cryptocurrency wallets or exchanges.

Final Thoughts: Bitcoin’s Unique Investment Potential

While the price of Bitcoin can be volatile, its long-term outlook remains promising. Its role as a store of value, much like gold, is becoming more recognized, and its growing adoption by both individuals and institutions means it’s likely here to stay.

For those new to investing, Bitcoin offers a chance to diversify your portfolio with an asset that has the potential for high returns while being part of a broader movement toward decentralized, digital finance. With continued support from the financial industry and institutional players, Bitcoin is solidifying its place as a reliable, future-proof asset—and one worth considering for any beginner investor looking for a modern investment opportunity.

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