$2 Billion in Bitcoin Depart Grayscale’s GBTC Since Jan. 12
In the U.S. market, nine newly launched spot bitcoin exchange-traded funds (ETFs) and the recently revamped GBTC have collectively recorded a trading volume of $16.53 billion over a six-day period. However, GBTC, which commands the majority of this trade volume, has experienced a significant reduction in its bitcoin holdings. In the past 24 hours alone, the trust has shed over 14,300 bitcoin, bringing its total holdings down to 566,973 bitcoin.
Since transitioning into a publicly traded ETF, GBTC has seen notable outflows. On Thursday, the trust's holdings decreased by 10,823.86 BTC, and following the trading sessions on Friday, there was a further reduction of 14,300.52 BTC. Cumulatively, since Jan. 12, 2024, the trust has experienced an outflow of 50,106.59 BTC, which is valued at slightly above $2 billion.
Possible Factors Contributing to GBTC Sell-Off
There are several factors that contribute to the intense selling of GBTC. Initially, GBTC shareholders may have felt constrained when the shares, which initially traded at a premium to their net asset value (NAV), abruptly transitioned to a discount. This discount began in February 2021 and persisted until the beginning of this year. Long-term investors may have been waiting for an opportunity to sell once the discount narrowed. Additionally, investors who speculated that the discount would diminish and bought GBTC at a lower price may now be selling their shares for substantial gains.
Another possible reason for the sell-off is that some GBTC investors are exploring alternatives with more competitive management fees. Grayscale's GBTC has the highest fees in its category. However, despite the high fees, Grayscale's bitcoin trust has seen the highest trading volume out of all the newly launched ETFs, accounting for 54.26% of all the trading action recorded by spot bitcoin ETFs.
Equilibrium Emerging as Other ETFs Experience Growth
Before the recent approvals on Jan. 11, 2024, the focus was mainly on expected inflows, with little attention paid to potential outflows from GBTC. However, a modest semblance of equilibrium has emerged. The combined total of BTC held by IBIT and FBTC now slightly surpasses the outflows GBTC has experienced since Jan. 12. Additionally, the other ETFs competing with GBTC, IBIT, and FBTC have also seen growth in their BTC reserves, although to a much lesser extent. Despite holding significant amounts of bitcoin, these funds, along with the other seven ETFs, remain substantially smaller compared to GBTC's vast reserve.
In conclusion, GBTC has seen significant outflows since Jan. 12, with various factors contributing to the sell-off. As the competition among ETFs increases and investors seek alternatives with lower management fees, the landscape of bitcoin holdings is shifting. It will be interesting to see how these trends continue to evolve in the coming months.
What are your thoughts on the outflows GBTC has experienced? Share your opinions in the comments section below.
Frequently Asked Questions
Is gold a good IRA investment?
For anyone who wants to save some money, gold can be a good investment. It's also a great way to diversify your portfolio. There is much more to gold than meets your eye.
It's been used throughout history as a currency, and even today, it remains a popular form of payment. It is often called “the oldest currency in the world.”
But unlike paper currencies, which governments create, gold is mined out of the earth. It is very valuable, as it is rare and hard to create.
The price of gold fluctuates based on supply and demand. When the economy is strong, people tend to spend more money, which means fewer people mine gold. Gold's value rises as a result.
On the flip side, people save cash for emergencies and don't spend it. This means that more gold is produced, which reduces its value.
This is why gold investment makes sense for both individuals and businesses. You'll reap the benefits of investing in gold when the economy grows.
Also, your investments will earn you interest which can help increase your wealth. You won't lose your money if gold prices drop.
Can I buy gold with my self-directed IRA?
Your self-directed IRA can be used to purchase gold, but first you need to open an account with a brokerage firm such as TD Ameritrade. Transfer funds from an existing retirement account are also possible.
The IRS allows individuals to contribute as high as $5,500 ($6,500 if they are married and jointly) to a traditional IRA. Individuals are allowed to contribute $1,000 each ($2,000 if married or filing jointly) to a Roth IRA.
If you do decide you want to invest your money in gold, you should look into purchasing physical bullion instead of futures contracts. Futures contract are financial instruments that depend on the gold price. You can speculate on future prices, but not own the metal. But, physical bullion is real bars of gold or silver that you can hold in one's hand.
How Much of Your IRA Should Include Precious Metals?
It is important to remember that precious metals can be a good investment for anyone. They don't require you to be wealthy to invest in them. There are many methods to make money off of silver and gold investments.
You may consider buying physical coins such as bullion bars or rounds. Stocks in companies that produce precious materials could be purchased. Your retirement plan provider may offer an IRA rollingover program.
You will still reap the benefits of owning precious metals, regardless of which option you choose. Even though they aren't stocks, they still offer the possibility of long-term growth.
And unlike traditional investments, they tend to increase in value over time. This means that if you decide on selling your investment later, you'll likely get more profit than you would with traditional investing.
How is gold taxed in Roth IRA?
A tax assessment for an investment account will be based on the current market value, and not what you paid initially. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
You don't pay tax if you have the money in a traditional IRA/401k. Only earnings from capital gains and dividends are subject to tax. These taxes do not apply to investments that have been held for more than one year.
The rules that govern these accounts differ from one state to the next. Maryland's rules require that withdrawals be taken within 60 days after you turn 59 1/2. Massachusetts allows you to delay withdrawals until April 1. New York has a maximum age limit of 70 1/2. You should plan and take distributions early enough to cover all retirement savings expenses to avoid penalties.
Statistics
- 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)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
External Links
law.cornell.edu
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement accounts
cftc.gov
irs.gov
forbes.com
- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How To
The History of Gold as an Asset
Gold was a currency from ancient times until the early 20th century. It was universally accepted and loved for its beauty, durability, purity and divisibility. It was also traded internationally due to its high value. However, since there were no international standards for measuring gold at this point, different weights and measures existed worldwide. For example, one pound sterling in England equals 24 carats; one livre tournois equals 25 carats; one mark equals 28 carats; and so on.
The United States started issuing American coins in the 1860s made of 90% copper and 10% zinc. This resulted in a decline of foreign currency demand and an increase in the price. The price of gold dropped because the United States began to mint large quantities of gold coins. Because the U.S. government had too much money coming into circulation, they needed to find a way to pay off some debt. They decided to return some of the gold they had left to Europe.
Many European countries didn't trust the U.S. dollars and started to accept gold for payment. Many European countries began to use paper money and stopped accepting gold as payment after World War I. Since then, the price of gold has increased significantly. Today, although the price fluctuates, gold remains one of the safest investments you can make.
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By: Jamie Redman
Title: GBTC Bitcoin Holdings Decrease as Outflows Continue
Sourced From: news.bitcoin.com/gbtcs-mixed-fortune-54-market-share-in-etf-trade-volume-accompanied-by-2-billion-btc-exodus/
Published Date: Sat, 20 Jan 2024 17:00:22 +0000
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