Bitcoin was expected to be the headline-grabber in the financial world with its price surging throughout the year. While the leading cryptocurrency did indeed witness a significant increase, it wasn’t the best-performing commodity of the year. That honor belongs to cocoa, which has dramatically outperformed Bitcoin with an incredible 185% price surge, leaving even the digital currency giant trailing behind.

Cocoa, the key ingredient in chocolate, has become the unexpected commodity star of 2024. As Bitcoin rallied by 126.05%—a noteworthy achievement for a volatile asset like cryptocurrency—cocoa prices soared at an even more impressive rate. By December, Bitcoin’s price had risen to $95,200, from a starting point of around $42,000 earlier in the year. Although this performance is noteworthy, it was not enough to surpass cocoa’s remarkable rise, which was largely driven by supply shortages in key production regions.

The Factors Behind Cocoa’s Surging Prices

Cocoa’s explosive price increase can be attributed to a combination of factors affecting its global supply. West Africa, which is responsible for the majority of the world’s cocoa production, has been facing significant challenges in recent years. The region, particularly countries like Ghana, Cameroon, and Ivory Coast, has been hit by climate-related issues, such as droughts and irregular rainfall, which have severely affected crop yields. These weather patterns, combined with a lack of investment in modern farming practices, have led to a decline in cocoa production.

Another critical factor contributing to the surge in cocoa prices is the cacao swollen shoot virus disease (CSSVD), which has devastated cocoa crops in many regions. This disease has had a particularly detrimental effect on cocoa plantations, reducing harvests and further tightening global supply. As a result, cocoa prices have risen sharply throughout 2024, especially during the latter part of the year, when fears of continued supply shortages have persisted.

In late December, cocoa prices hit an all-time high, surpassing $12,000 per ton for the first time in history. This surge is a reflection of the ongoing concerns about global cocoa supply and the difficulties producers face in restoring production levels to meet demand. With these challenges showing no signs of abating, the price of cocoa is expected to remain elevated as supply issues continue to dominate the market.

Comparison with Bitcoin’s Performance

While Bitcoin’s price surge is certainly noteworthy, it has been less dramatic in comparison to the rise in cocoa prices. Throughout 2024, Bitcoin has faced its own set of challenges. Despite its gains, the cryptocurrency market has remained volatile, with regulatory concerns, market sentiment, and competition from other digital currencies weighing on investor confidence. This has made Bitcoin’s upward movement more subdued compared to the explosive gains seen in traditional commodities like cocoa.

In contrast, cocoa’s rise has been driven by tangible and immediate factors. The agricultural sector’s difficulties—such as climate change, disease, and underinvestment in farming techniques—are all real-world challenges that directly affect cocoa’s availability. As demand for cocoa remains strong, particularly with increasing consumption in emerging markets, the scarcity of supply has pushed prices higher, making cocoa a more predictable investment in terms of price movements.

While Bitcoin has long been considered a hedge against economic uncertainty, its performance in 2024 has been more subdued, particularly in comparison to the commodity boom witnessed in cocoa. For investors who traditionally look to commodities as a safe haven during times of market volatility, cocoa has proven to be an unexpectedly lucrative option in 2024.

Other Commodities Seeing Gains

Cocoa’s rise in 2024 has not been an isolated event. Other commodities have also posted impressive gains this year. Orange juice prices have increased by 73%, while natural gas has risen by 43%. However, even with these notable gains, cocoa’s 185% surge stands out as the most impressive commodity performance of the year.

These figures highlight the unpredictable nature of commodity markets, where factors like climate, disease, and geopolitical instability can create significant price fluctuations. While Bitcoin and other cryptocurrencies are often seen as speculative assets, commodities like cocoa are more tied to real-world production challenges, which can lead to more stable yet significant price movements over time.

Conclusion

2024 will go down in history as the year cocoa outshone Bitcoin, defying expectations and achieving a remarkable 185% price increase. While Bitcoin’s performance was impressive, cocoa’s rise is grounded in real-world challenges such as supply shortages, climate change, and disease. As we look to the future, the cocoa market is expected to remain volatile, with continued concerns about supply shortages and production difficulties. Investors will likely continue to monitor both the crypto and commodity markets, but for now, cocoa has earned its place as the surprise winner of 2024’s commodity race.