Executive Summary

In a year where bitcoin (BTC) outperformed traditional asset classes and the wider digital asset space, Q3 marked the first negative quarter for BTC and ether (ETH) in 2023.

The quarter's downturn, observed not just in crypto but broadly, stemmed from a volatile global economic setting, amplified by a sharp negative movement in U.S. interest rates, specially the long end of the curve, unsettling bond and equity markets globally—Q3 saw a 16.1% fall in 10-year US Treasury prices. Such uncertainty left investors unsure about future risk asset trajectories.

Although crypto's performance was negatively impacted by unfounded rumors of SpaceX selling its bitcoin holdings and fears of selling pressure after a court gave FTX the green light to start liquidating digital assets as part of their ongoing bankruptcy process, crypto's fundamental factors suggest that this quarter’s performance was a natural market correction after an impressive 1H23.

There were positive aspects to highlight as well: notably, BTC and ETH have demonstrated reduced volatility, signaling the maturation of the crypto market and a shift toward institutional investment rather than retail engagement. A number of partnerships from traditional finance players and crypto initiatives were made in the last quarter, which reaffirms the institutional adoption trend we’ve been emphasizing throughout 2023.