Cathie Wood, the CEO of ARK Invest, has observed a notable shift in investment preferences, with a growing number of investors favoring bitcoin over traditional gold investments. This trend has become particularly prominent following the introduction of spot bitcoin ETFs, which offer investors a more streamlined way to access the cryptocurrency.
Investors Turning to Bitcoin Amid Financial Uncertainty, Says Cathie Wood
In a recent video on ARK Invest's YouTube channel, Cathie Wood stated that investors are increasingly moving away from traditional gold investments and towards bitcoin. This shift has become more apparent since the launch of spot bitcoin exchange-traded funds (ETFs), which provide a more convenient means of investing in the cryptocurrency.
During a discussion with Brett Winton, ARK's chief futurist, Wood highlighted bitcoin's remarkable resilience and growth, especially during times of financial instability. She referenced the situation in March 2023 when the U.S. faced a regional bank crisis, causing bitcoin's value to surge by 40% while the regional bank index plummeted. "Bitcoin shot up 40% as the KRE, the regional bank index, was imploding. And here again, the regional bank index is acting up, and we are seeing Bitcoin catch a bid again," Wood stated, emphasizing bitcoin's emerging role as a "flight to safety" asset.
Wood presented a compelling chart that demonstrated bitcoin's price in relation to gold, showcasing a strong and consistent upward trend. She explained that this trend indicates bitcoin's ongoing process of partially replacing gold as a preferred investment option. "This chart just shows you that even relative to gold, Bitcoin has been rising. There's now a substitution into Bitcoin, and we think that is going to continue," she remarked.
Addressing the volatility following the launch of spot bitcoin ETFs, including ARK 21shares Bitcoin ETF on January 11, Wood acknowledged the anticipated price correction. Despite a 20% drop in bitcoin's price post-launch, Wood remains optimistic, pointing out that 15 million out of the 19.5 million bitcoins currently in circulation have not been moved in over 155 days, indicating a strong holding pattern among investors.
ARK Invest's involvement in the cryptocurrency space extends beyond bitcoin. The firm has made significant investments in Coinbase stock (COIN), although it has reduced its holdings since June 2023. Currently, ARK holds 7.187 million shares in Coinbase, valued at $843 million, reflecting its continued bullish stance on the crypto sector despite market fluctuations.
What are your thoughts on Wood's observation that investors who typically choose gold as an investment are now shifting towards bitcoin? Share your opinions and thoughts on this matter in the comments section below.
Frequently Asked Questions
Is gold a good investment IRA option?
If you are looking for a way to save money, gold is a great investment. It's also a great way to diversify your portfolio. But gold is not all that it seems.
It has been used throughout the history of currency and remains a popular payment method. It's sometimes called “the world's oldest money”.
Gold is not created by governments, but it is extracted from the earth. It's hard to find and very rare, making it extremely valuable.
The supply and demand factors determine how much gold is worth. People tend to spend more when the economy is healthy, which means that fewer people are able to mine gold. The result is that gold's value increases.
On the flip side, when the economy slows down, people hoard cash instead of spending it. This increases the production of gold, which in turn drives down its value.
It is this reason that gold investing makes sense for businesses and individuals. If you have gold to invest, you will reap the rewards when the economy expands.
Also, your investments will earn you interest which can help increase your wealth. In addition, you won’t lose any money if gold falls in value.
Who owns the gold in a Gold IRA?
An individual who has gold is considered to be a “form of money” by the IRS and subject to taxation.
You must have gold at least $10,000 and it must be stored for at the least five years in order to take advantage of this tax-free status.
Owning gold can also help protect against inflation and price volatility, but it doesn't make sense to hold gold if you're not going to use it.
If you plan to sell the gold one day, you will need to report its worth. This will affect how much capital gains tax you owe on cash you have invested.
It is a good idea to consult an accountant or financial planner to learn more about your options.
Can I keep a Gold ETF in a Roth IRA
Although a 401k plan might not provide this option, you should still consider other options like an Individual Retirement Account (IRA).
A traditional IRA allows for contributions from both employer and employee. An Employee Stock Ownership Plan (ESOP) is another way to invest in publicly traded companies.
An ESOP gives employees tax advantages as they share the stock of the company and the profits it makes. The money invested in ESOPs is taxed at a lower rate that if it were owned directly by an employee.
A Individual Retirement Annuity is also possible. You can make regular payments to your IRA throughout your life, and you will also receive income when you retire. Contributions to IRAs will not be taxed
Should You Buy Gold?
Gold was considered a safety net for investors during times of economic turmoil in the past. Many people today are moving away from stocks and bonds to look at precious metals, such as gold, as a way to diversify their investments.
Gold prices have been on an upward trend over recent years, but they remain relatively low compared to other commodities such as oil and silver.
Experts believe this could change soon. Experts predict that gold prices will rise sharply in the wake of another global financial collapse.
They also note that gold is increasingly popular because of its perceived intrinsic value and potential return.
If you are considering investing in gold, here are some things that you need to keep in mind.
- Before you start saving money for retirement, think about whether you really need it. You can save money for retirement even if you don't invest in gold. However, when you retire at age 65, gold can provide additional protection.
- Second, you need to be clear about what you are buying before you decide to buy gold. Each offer varying degrees of security and flexibility.
- Last but not least, gold doesn't provide the same level security as a savings account. Losing your gold coins could result in you never being able to retrieve them.
Don't buy gold unless you have done your research. Protect your gold if you already have it.
How much should precious metals make up your portfolio?
This question can only be answered if we first know what precious metals are. Precious metals refer to elements with a very high value relative other commodities. They are therefore very attractive for investment and trading. Gold is today the most popular precious metal.
However, many other types of precious metals exist, including silver and platinum. The price of gold fluctuates, but it generally remains stable during times of economic turmoil. It is also unaffected significantly by inflation and Deflation.
As a general rule, the prices for all precious metals tend to increase with the overall market. That said, they do not always move in lockstep with each other. The price of gold tends to rise when the economy is not doing well, but the prices of the other precious metals tends downwards. This is because investors expect lower rates of interest, which makes bonds less attractive investments.
However, when an economy is strong, the reverse effect occurs. Investors choose safe assets such Treasury Bonds over precious metals. They become less expensive and have a lower value because they are limited.
It is important to diversify your portfolio across precious metals in order to maximize your profit from precious metals investments. Because precious metals prices are subject to fluctuations, it is best to invest across multiple precious metal types, rather than focusing on one.
Statistics
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
External Links
forbes.com
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
irs.gov
bbb.org
investopedia.com
How To
A growing trend: Gold IRAs
Investors seek diversification and protection against inflation by using gold IRAs.
Owners can invest in gold bars and bullion with the gold IRA. It can be used as a tax-free way to grow and it is an alternative investment option for people who are not comfortable with stocks or bonds.
A gold IRA allows investors the freedom to manage their wealth without worrying about volatility in the markets. The gold IRA can be used to protect against inflation or other potential problems.
Investors also have the benefit of physical gold, which has unique properties such durability, portability and divisibility.
Additionally, the gold IRA has many benefits. It allows you to quickly transfer your gold ownership to your heirs. The IRS doesn't consider gold a commodity or currency.
This means that investors who are looking for financial safety and security are becoming more interested in the gold IRA.
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By: David Sencil
Title: Bitcoin Surpasses Gold as the Preferred ‘Flight to Safety' Asset, According to Cathie Wood
Sourced From: news.bitcoin.com/bitcoin-emerges-as-flight-to-safety-asset-outshining-gold-says-cathie-wood/
Published Date: Wed, 07 Feb 2024 08:30:46 +0000
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