A recent study conducted by Glassnode on onchain activities has revealed that the scarcity of the bitcoin supply has tightened. Despite a substantial increase in bitcoin's value this year, the study shows that the inactivity of coins has reached both multi-year and unprecedented highs.
Bitcoin's Tightening Supply Defies Price Rally, Reveals Glassnode Study
Over the past year, BTC has experienced a 71% surge and a 114% increase from the beginning of the year to date. However, Glassnode's latest report indicates that the availability of bitcoin remains limited, mainly due to steadfast holders dominating the market.
Upon closer examination, the onchain report reveals that 68.8% of bitcoin (BTC) has not been moved in over a year. Additionally, the non-liquid supply index has reached a record-breaking 15.4 million BTC. The Glassnode team has identified that long-term investors hold a significant amount of bitcoin, nearing record levels, while short-term investors' supply has dropped to unprecedented lows.
This growing gap indicates a solidification of supply, as current investors are reluctant to sell their holdings. Since July 2022, the difference between supplies held by long-standing and recent investors has expanded, highlighting the contrast between dormant and circulating supplies.
Furthermore, Glassnode introduces a new metric called the Activity-to-Vaulting Ratio, which has been declining since June 2021, with a notable decrease in trajectory post-June 2022. According to Glassnode, this shift signifies the decline of the market's "exuberance" during the 2021-22 cycle.
Upon analyzing spending patterns, researchers have observed a trend of investor accumulation and retention rather than active trading. The Sell-Side Risk Ratio for short-term holders has significantly increased after the rally, indicating some profit-taking in the short term. On the other hand, this metric remains historically low for long-term holders.
Glassnode's evaluation of wallet activity indicates a boost in investor confidence, with significant contributions to wallet sizes across the board. "Shrimps" and "Crabs" have been buying bitcoin in large quantities, absorbing 92% of the bitcoin mined since May 2022. "Shrimps" hold less than one bitcoin, "Crabs" hold 1-10 BTC, and "Fish" hold anywhere between 10-100 BTC.
In conclusion, Glassnode analysts state, "The bitcoin supply is historically tight, with many supply metrics indicating 'coin inactivity' reaching multi-year and all-time highs. This suggests that the bitcoin supply is extremely tightly held, which is impressive considering the strong price performance year-to-date."
What are your thoughts on Glassnode's report regarding the tightening bitcoin supply? Share your opinions in the comments section below.
Frequently Asked Questions
How much do gold IRA fees cost?
$6 per month is the Individual Retirement Account Fee (IRA). This includes account maintenance and any investment costs.
If you want to diversify, you may be required to pay extra fees. These fees will vary depending upon the type of IRA chosen. Some companies offer free checking accounts, but charge monthly fees to open IRA accounts.
Most providers also charge an annual management fee. These fees can range from 0% up to 1%. The average rate for a year is.25%. These rates are usually waived if you use a broker such as TD Ameritrade.
What are some of the advantages and disadvantages to a gold IRA
An Individual Retirement Plan (IRA) has a major advantage over regular savings accounts. It doesn't tax any interest earned. An IRA is a great way to save money and not have to pay taxes on the interest you earn. There are some disadvantages to this investment.
You could lose all of your accumulated money if you take out too much from your IRA. Also, the IRS may not allow you to make withdrawals from your IRA until you're 59 1/2 years old. If you do decide to withdraw funds from your IRA, you'll likely need to pay a penalty fee.
The downside is that managing your IRA requires fees. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management charges ranging anywhere from $10 to $50.
Insurance is necessary if you wish to keep your money safe from the banks. Most insurers require you to own a minimum amount of gold before making a claim. Insurance that covers losses upto $500,000.
You will need to decide how much gold you wish to use if you opt for a gold IRA. Some providers limit the amount of gold that you are allowed to own. Some providers allow you to choose your weight.
It's also important to decide whether or not to buy gold futures contracts. Physical gold is more costly than gold futures. Futures contracts allow you to buy gold with more flexibility. They let you set up a contract that has a specific expiration.
Also, you will need to decide on the type of insurance coverage you would like. The standard policy does not include theft protection or loss caused by fire, flood, earthquake. It does include coverage for damage due to natural disasters. You might consider purchasing additional coverage if your area is at high risk.
In addition to insurance, you'll need to consider the cost of storing your gold. Insurance doesn't cover storage costs. Additionally, safekeeping is usually charged by banks at around $25-$40 per monthly.
If you decide to open a gold IRA, you must first contact a qualified custodian. A custodian is responsible for keeping track of your investments. They also ensure that you adhere to federal regulations. Custodians cannot sell your assets. Instead, they must maintain them for as long a time as you request.
Once you've chosen the best type of IRA for you, you need to fill in paperwork describing your goals. The plan should contain information about the types of investments you wish to make such as stocks, bonds or mutual funds. Also, you should specify how much each month you plan to invest.
After completing the forms, send them along with a check or a small deposit to your chosen provider. The company will then review your application and mail you a letter of confirmation.
A financial planner is a good idea when opening a gold IRA. A financial planner can help you decide the type of IRA that is right for your needs. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
What is the tax on gold in Roth IRAs?
Investment accounts are subject to tax based only on their current value and not the amount you originally paid. Any gains made by you after investing $1,000 in a stock or mutual fund are subject to tax.
You don't pay tax if you have the money in a traditional IRA/401k. Taxes are only charged on capital gains or dividends earned, which only apply to investments longer than one calendar year.
These rules vary from one state to another. Maryland is an example of this. You must withdraw your funds within 60 calendar days of turning 59 1/2. Massachusetts allows you to wait until April 1. New York is open until 70 1/2. To avoid penalties, plan ahead so you can take distributions at the right time.
What's the advantage of a Gold IRA?
There are many benefits to a gold IRA. It's an investment vehicle that allows you to diversify your portfolio. You decide how much money is put in each account and when it is withdrawn.
You also have the option to transfer funds from other retirement plans into a IRA. This makes for an easy transition if you decide to retire early.
The best thing is that investing in gold IRAs doesn't require any special skills. They are offered by most banks and brokerage companies. Withdrawals can be made instantly without the need to pay fees or penalties.
There are also drawbacks. The volatility of gold has been a hallmark of its history. It is important to understand why you are investing in gold. Are you looking for growth or safety? Is it for insurance purposes or a long-term strategy? Only when you are clear about the facts will you be able take an informed decision.
If you plan on keeping your gold IRA alive for a while, you may want to consider purchasing more than 1 ounce of pure gold. One ounce doesn't suffice to cover all your needs. Depending on the purpose of your gold, you might need more than one ounce.
You don't have to buy a lot of gold if your goal is to sell it. Even one ounce is enough. But you won't be able to buy anything else with those funds.
Statistics
- You can only purchase gold bars at least 99.5% purity. (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)
- 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)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
External Links
wsj.com
- Saddam Hussein’s InvasionHelped Uncage a Bear In 1989 – WSJ
- Want to Keep Gold in Your IRA at Home? It's Not Exactly Lawful – WSJ
forbes.com
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
investopedia.com
- Do You Need a Gold IRA to Get Retirement?
- What are the Options? Types, Spreads, Example and Risk Metrics
law.cornell.edu
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement plans
How To
Guidelines for Gold Roth IRA
Start saving as soon as possible to save for your retirement. Start saving as soon and as often as you're eligible (usually around 50 years old) and keep going until retirement. It's vital to contribute enough money each year to ensure adequate growth on an ongoing basis.
Also, you want to take advantage tax-free options such as a traditional 401k, SEP IRA or SIMPLE IRA. These savings vehicles permit you to make contributions, but not pay any tax until your earnings are withdrawn. These savings vehicles can be a great option for individuals who don't qualify for employer matching funds.
It is important to save consistently over time. You may not be eligible for any tax benefits if your contribution is less than the maximum allowed.
—————————————————————————————————————————————————————————————–
By: Jamie Redman
Title: Glassnode Data Shows Bitcoin Supply Less Liquid Than Ever Despite Market Gains
Sourced From: news.bitcoin.com/glassnode-data-shows-bitcoin-supply-less-liquid-than-ever-despite-market-gains/
Published Date: Wed, 08 Nov 2023 18:30:10 +0000
Leave a Reply