In a Monday report, brokerage firm Canaccord pointed out that Bitcoin has outperformed the S&P 500 over the past year. The firm also suggested that a decline in Bitcoin might be healthier for the overall cryptocurrency market and predicted a potential rebound for Bitcoin between now and April of next year.

Bitcoin has been leading the market over the past year, and the rebound period could extend until next April. Canaccord's report indicated that major cryptocurrencies continue to outperform the broader market. The report stated, "Bitcoin, the largest cryptocurrency by market capitalization, has experienced a year-over-year growth of approximately 140% in the last quarter, outperforming Ethereum's 60% growth and the S&P 500's 30% growth."

If Bitcoin follows its historical pattern, it typically rebounds within 6-12 months after a halving event and reaches a new all-time high 2-6 months later. This suggests a potential rebound period between now and April next year. The most recent Bitcoin halving occurred on April 20th, aligning with this projected timeframe. However, unlike previous cycles, this time Bitcoin reached a new all-time high before the halving event.

Analyst: Bitcoin's Decline is More Beneficial for the Overall Market

Canaccord also suggested that the Federal Reserve's interest rate cuts would drive up both stocks and cryptocurrencies. Analyst Michael Graham stated that Bitcoin's current performance remains consistent with other risky assets, responding positively to a low-interest-rate environment.

Michael Graham said, "We believe that a decline in Bitcoin is the healthiest outcome for the long-term future of cryptocurrencies." He added, "Considering the reduced need for inflation hedging, investors will be more willing to support long-term investments and innovation. Ethereum and other digital assets will rise alongside stocks."

The report noted that the current correlation between Bitcoin and risk assets is 0.4, lower than its historical high of 0.6 in June 2022. Additionally, the 7% increase in stablecoin supply during the third quarter was a positive sign for the market. The report also mentioned that although the timing of future interest rate cuts remains uncertain, the Bitcoin halving has already adjusted the supply and demand dynamics, which could further drive ETF adoption.

As for whether Bitcoin is a risk asset or a safe-haven asset like digital gold, its historical performance makes it difficult to classify as a safe-haven asset due to its high correlation with the broader market. However, as BlackRock's report suggested, Bitcoin has experienced relatively smaller declines compared to the S&P 500 during certain events, leading BlackRock to conclude that Bitcoin is more than just a safe-haven asset.

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.