Introduction
The potential approval of a spot bitcoin exchange-traded fund (ETF) in the U.S. has the power to inject a substantial amount of new capital into the cryptocurrency market. In a recent analysis by Glassnode, the impact of spot bitcoin ETFs on market demand and supply is explored, signaling a new era for bitcoin's integration into mainstream financial markets.
Spot Bitcoin ETF: Catalyst for Demand and Increased Volatility
According to a report published by Glassnode on November 20, the approval of a spot bitcoin ETF could result in an influx of demand, which would face a relatively limited supply of liquid bitcoin (BTC). This imbalance has the potential to amplify market volatility. The blockchain data firm highlights the existence of significant pent-up demand for a spot bitcoin ETF product.
The report estimates that up to $70.5 billion could enter the market from stock, bond, and gold investors, even if only a fraction of their assets is allocated to bitcoin. Even more conservative projections suggest that tens of billions of dollars could flow into the market within the first few years.
Unlike existing bitcoin investment vehicles, a spot ETF would provide institutions with direct and regulated exposure to bitcoin. This feature alone could attract substantial inflows, even if some capital is shifted from current proxy funds. Historical data supports the notion that new access to assets stimulates demand.
Bitcoin's Available Supply
To understand the potential market dynamics post-ETF introduction, Glassnode's study emphasizes the importance of considering bitcoin's available supply. The analysis reveals that BTC's circulating supply has been significantly tightened due to prolonged accumulation. Currently, over 76% of bitcoin is held long-term, primarily by holders who are less responsive to price fluctuations. Additionally, the research shows that short-term and active trader supplies have reached multi-year lows.
Investors increasingly move their assets into holding wallets, resulting in a growth in illiquid supply. On the other hand, exchange balances reflect the opposite trend, indicating limited market liquidity despite rebounding trading volumes. Glassnode's research highlights that, despite institutional interest, tradable bitcoin supply remains limited.
According to Marcin Miłosierny, a B2B contributor to Glassnode, even modest inflows resulting from a spot ETF approval could have a significant impact on bitcoin prices. Analyzing bitcoin's realized market capitalization helps gauge its sensitivity to inflows. When small inflows lead to substantial changes in valuation, the potential market impact is high.
The report concludes that the approval of a spot bitcoin ETF represents a pivotal moment for institutional involvement. However, it also warns that the resulting changes in supply and demand could significantly heighten market volatility. By closely monitoring the shifts between different cohorts, traders and investors can navigate the complex landscape of Bitcoin onchain more effectively.
Your Thoughts
What are your thoughts on Glassnode's report regarding a spot bitcoin ETF? Share your opinions and insights in the comments section below.
Frequently Asked Questions
Is it a good retirement strategy to buy gold?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
Physical bullion bars are the most popular way to invest in gold. There are other ways to invest gold. You should research all options thoroughly before making a decision on which option you prefer.
If you don’t have the funds to invest in safe places, such as a safe deposit box or mining equipment companies, buying shares of these companies might be a better investment. If you need cash flow to finance your investment, then gold stocks could be a good option.
You can also put your money in exchange traded funds (ETFs). These funds allow you to be exposed to the price and value of gold by holding gold related securities. These ETFs can include stocks of precious metals refiners and gold miners.
Should You Get Gold?
In the past, gold was considered a haven for investors during economic turmoil. 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.
Although gold prices have shown an upward trend in recent years, they are still relatively low when compared to other commodities like oil and silver.
Some experts believe that this could change very 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.
Consider these things if you are thinking of investing in gold.
- Consider whether you will actually need the money that you are saving for retirement. It's possible to save for retirement without putting your savings into gold. Gold does offer an extra layer of protection for those who reach retirement age.
- You should also be aware of what you are getting into before you buy gold. There are many types of gold IRA accounts. Each one offers different levels security and flexibility.
- Last but not least, gold doesn't provide the same level security as a savings account. It is possible to lose your gold coins.
Don't buy gold unless you have done your research. And if you already own gold, ensure you're doing everything possible to protect it.
What are the benefits to having a gold IRA
An Individual Retirement Account (IRA) is the best way to put money towards retirement. It is tax-deferred until it's withdrawn. You control how much you take each year. There are many types available. Some are better suited for people who want to save for college expenses. Others are made for investors seeking higher returns. Roth IRAs permit individuals to contribute after the age 59 1/2. Any earnings earned at retirement are subject to tax. Once they start withdrawing money, however, the earnings aren’t subject to tax again. So if you're planning to retire early, this type of account may make sense.
Because it allows you money to be invested in multiple asset classes, a ‘gold IRA' is similar to any other IRAs. Unlike a regular IRA where you pay taxes on gains, a gold IRA doesn't require you to worry about taxation while you wait to get them. For people who would rather invest than spend their money, gold IRA accounts are a good option.
Another benefit to owning IRA gold is the ability to withdraw automatically. You won't have the hassle of making deposits each month. To ensure that you never miss a payment, you could set up direct debits.
Gold is one of today's most safest investments. Because it isn't tied to any particular country its value tends be steady. Even in times of economic turmoil gold prices tend to remain stable. Therefore, gold is often considered a good investment to protect your savings against inflation.
Statistics
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- 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)
- 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)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
External Links
wsj.com
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- You want to keep gold in your IRA at home? It's Not Exactly Legal – WSJ
law.cornell.edu
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement plans
irs.gov
finance.yahoo.com
How To
The best way online to buy gold or silver
First, understand the basics of gold. Precious metals like gold are similar to platinum. It is rare and used as money due to its durability and resistance against corrosion. It is very difficult to use and most people prefer to purchase jewelry made of it over actual bars of Gold.
Two types of gold coins are available today: the legal tender type and the bullion type. Legal tender coins can be used for circulation within a country. These coins usually come in denominations such $1, $5 and $10.
Bullion coins are only minted to be used for investment purposes. Their value increases over time because of inflation.
They aren’t exchangeable in any currency exchange. For example, if a person buys $100 worth of gold, he/she gets 100 grams of gold with a value of $100. Every dollar spent on gold purchases, the buyer receives one gram of gold.
When you are looking to purchase gold, the next thing to know is where to get it. There are many options for buying gold directly from dealers. First off, you can go through your local coin shop. You might also consider going through a reputable online seller like eBay. You might also consider buying gold from an online private seller.
Private sellers are individuals who offer to sell gold at retail or wholesale prices. Private sellers typically charge 10% to 15% commission on each transaction. This means that you will get less back from a private seller than if you sell it through a coin shop or on eBay. This option is often a great one for investors in gold, as it gives you greater control over the item's value.
You can also invest in gold physical. While physical gold is easier than paper certificates to store, you still need to make sure it is safe. Physical gold should be stored in an impenetrable container, such a vault and safety deposit box to ensure its safety.
When buying gold on your own, you can visit a bank or a pawnshop. A bank can provide you with a loan to cover the amount you wish to invest in gold. These are small businesses that let customers borrow money against the items they bring to them. Banks typically charge higher interest rates than pawn shops.
You can also ask for help to purchase gold. Selling gold is also easy. Contact a company such as GoldMoney.com, and you can set up a simple account and start receiving payments immediately.
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By: Jamie Redman
Title: Glassnode Analysis: Spot Bitcoin ETF Approval Could Bring $70B Capital Influx
Sourced From: news.bitcoin.com/glassnode-analysis-reveals-spot-bitcoin-etf-approval-could-unleash-70b-capital-influx/
Published Date: Thu, 23 Nov 2023 23:30:49 +0000
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