Bitcoin's counterattack: a 42% increase in the fourth quarter, surpassing the revelation of bank stocks

In the fourth quarter of 2023, the global financial market experienced thrilling fluctuations, and Bitcoin's performance was particularly eye-catching. This virtual currency, known as "digital gold", rose 42% in just a few months, which not only excited investors, but also surpassed the performance of many traditional bank stocks to a certain extent. Behind this phenomenon, it not only reflects the fluctuations in the value of Bitcoin itself, but also reveals deeper market trends and changes in investment psychology.

The rise of Bitcoin is not only a victory for the digital currency market, but also a powerful impact on the traditional financial system. As more and more investors turn their attention to digital assets, traditional financial institutions are facing unprecedented challenges. Especially in the context of increasing inflationary pressure and economic uncertainty, many people have begun to re-evaluate their investment portfolios and seek higher returns and security.

The surge in Bitcoin prices is closely related to multiple factors. First, the global economic recovery provides a good foundation for the rise of Bitcoin. The stimulus policies of various governments after the epidemic have made liquidity abundant, investors' risk appetite has increased, and the demand for high-risk and high-yield assets has been spawned. At the same time, more and more institutional investors have begun to pay attention to Bitcoin. Companies such as MicroStrategy and Square have included Bitcoin in their balance sheets, which has enhanced the market's confidence in Bitcoin to a certain extent.

Secondly, the market's recognition of Bitcoin's technological innovation and application scenarios has also boosted its price. As a decentralized digital currency, Bitcoin's transparency and security in blockchain technology have led more and more industries to explore its application potential. From financial services to supply chain management, the application of blockchain technology is constantly expanding, which undoubtedly provides new support for the value of Bitcoin.

In this wave of Bitcoin's rise, many investors may have a fear of "missing opportunities". Especially those investors who failed to enter the market in time in the early stage will inevitably feel anxious when seeing the rising price of Bitcoin. This psychological phenomenon is not uncommon in the investment community, and often leads investors to blindly follow the trend when the market is high, and eventually suffer losses. Therefore, when investing in digital currencies, investors should always keep a clear mind and avoid being swayed by market sentiment.

In addition, the relatively flat performance of bank stocks also reflects investors' concerns about the future profitability of traditional financial institutions. Against the backdrop of rising interest rates and stricter regulatory policies, many banks are facing the problem of weak profit growth. In contrast, the decentralized nature of Bitcoin and its potential as a value storage tool have attracted more and more investors. It can be said that the rise of Bitcoin is not only a reflection of market trends, but also a profound reflection on the traditional financial system.

In the Bitcoin investment boom, education and information acquisition are particularly important. Many novice investors lack a deep understanding of Bitcoin and the technology behind it when entering the market, which leads to being caught off guard in market fluctuations. Therefore, investors should actively seek educational resources, understand the basic knowledge of Bitcoin, market dynamics, and technical analysis, so as to make more rational investment decisions.

In general, Bitcoin's strong performance in the fourth quarter of 2023 is both a reflection of market trends and a result of changes in investor psychology. As more and more people realize the potential of digital assets, the future trend of Bitcoin will continue to be the focus of market attention. For investors, staying rational and learning in depth will be the key to coping with future market fluctuations.

In this era full of opportunities and challenges, investors should not only pay attention to the price fluctuations of Bitcoin itself, but also pay attention to the technological innovation and market trends behind it. Only by fully understanding the value of Bitcoin can we be invincible in this ever-changing market. Whether choosing to invest in Bitcoin or traditional bank stocks, rational decision-making and information acquisition will be skills that every investor must master.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Historically, traditional market analysts and old-school investors tend to view Bitcoin and other cryptocurrencies with a wary eye, and when crypto experts try to compare the two, these investors say it’s an apples-to-oranges argument. Take Warren Buffett, for example, who has repeatedly said that Bitcoin is nothing more than a Ponzi scheme because it doesn’t produce anything and therefore has no value.

These traditionalists argue that it’s irrational to compare Bitcoin to bank stocks like Apple, Tesla, or JPMorgan Chase, which employ workers, produce products, generate revenue and dividends, and then distribute them to shareholders.

Despite these arguments, one simple fact remains. Bitcoin has had a strong year, outperforming financial stocks in 2020 due to a massive increase in institutional demand, investors’ belief that Bitcoin could rise exponentially, and asymmetric price action in the face of global economic uncertainty.

As the chart below shows, most of the top U.S. banks reported record results in the second quarter as the entire market rebounded from the COVID-19-induced sell-off in mid-March, but significant threats to the stock market and the global economy remain. Meanwhile, Bitcoin has performed far better than the financial sector, especially in the fourth quarter.

Bitcoin price performance vs. JPMorgan Chase, Goldman Sachs, Bank of America, and Citigroup Source: TradingView.com

Bitcoin price up 42% since the start of Q4

Since the start of Q4, the price of Bitcoin on CoinMarketCap has risen from $10,773 to $15,366. In less than two months, the digital asset has grown by an impressive 42%, which also shows the strong momentum of this digital asset.

Bitcoin quarterly returns Source: Skew.com

Bitcoin's strong gains can be attributed in part to the growing perception that Bitcoin is an alternative store of value. Earlier this year, Wall Street billionaire Paul Tudor
Jones called Bitcoin an ideal inflation investment vehicle. The overall positive sentiment around Bitcoin as a potential safe-haven asset is clearly boosting its momentum.

Compared to other sectors, bank stocks have performed relatively well since the March crash. The shift in consumer demand from in-store purchases to online shopping has severely affected businesses that lack a digital footprint. But loose financial conditions, massive economic stimulus measures from the Federal Reserve, and good government support for businesses have led to strong quarterly results from banks that exceeded expectations. For example, JPMorgan Chase is up 32.63% since its March 23 low. Shares of the $319 billion banking giant are up more than 8% in the fourth quarter.

In the second quarter of 2020, JPMorgan Chase generated $7.3 billion in bond trading revenue, far exceeding analyst expectations. Meanwhile, investment banking and equity trading revenue also grew significantly.

Other major banks, including Goldman Sachs, saw similar trends. Goldman Sachs' trading division generated $4.55 billion in revenue. Goldman Sachs easily beat Wall Street expectations and grew 29% year-over-year.

While these performances are commendable, especially given the high uncertainty and economic downturn brought on by the coronavirus pandemic, Bitcoin's price action dwarfed that of banks and other risky assets for much of 2020.

Why does Bitcoin continue to outperform most assets?

Bitcoin Performance vs Macro Assets (%) Source: Skew.com

According to a survey released by Grayscale, more than half of U.S. investors are interested in investing in Bitcoin. The study states:

“Interest in Bitcoin is on the rise: more than half of U.S. investors are interested in investing in Bitcoin in 2020, and more than half (55%) of respondents express interest in Bitcoin investment products. This is a significant increase from the 36% of investors who expressed interest in Bitcoin in 2019.” Corporates, investment banks, and retail investors alike recognize that Bitcoin has huge growth potential, which may be why companies like PayPal and Square have decided to support cryptocurrencies.

Coincidentally, financial institutions that actively support cryptocurrencies have performed particularly well in recent months.

Take PayPal stock, for example, which is up 12% in the past three days and has shown a bullish trend since announcing that it would integrate cryptocurrency buying and selling.

As 2020 draws to a close, investors at all levels will be closely watching the Bitcoin price to see if it continues to significantly outperform the stock market.

The fact that major bank stocks such as JPMorgan Chase, Goldman Sachs, Citigroup, and Bank of America are lagging behind a “small-cap” cryptocurrency is significant and may attract more curious investors to the crypto space.

However, it cannot be ignored that the rise of Bitcoin is also accompanied by certain risks. The high volatility of the market has exposed investors to huge uncertainty. Although Bitcoin outperformed many bank stocks in the fourth quarter, any policy changes, market sentiment fluctuations or technical problems in the future market may cause it to fall rapidly. Therefore, while chasing high returns, investors must remain cautious and treat market risks rationally.