Bitcoin Magazine Pro summarizes the September FOMC meeting's medium-term thesis and how to view the looming macro volatility.
Below is an excerpt taken from Bitcoin Magazine Pro's most recent edition. Subscribe now to be the first to get these insights and other analysis on the bitcoin market right to your inbox.
Maximum Pain: Still Ahead Of Us
Pain is the word of today. This was the favorite word of Federal Reserve Chairman Jerome Powell during the September Federal Open Market Committee meeting. A simple economic announcement and the subsequent press conference sent markets into mild panic. Rates soared higher, volatility heated up, and equities sold off with bitcoin following. The S&P 500 Index fell below 3850 and bitcoin crashed to $18,100. The 2-year Treasury was at 4.1%.
Markets were not turned around by a 75 basis point increase, as the Fed's forecasts and Powell’s speech combined gave risk assets even more to worry about. Powell repeatedly reiterated that there would be more economic pain in the future (job losses, declines in housing markets, etc.). As a result, the inflation problem is being solved. He mentioned a lack inflation in their favorite "corePCE" measure (personal consumption expenditures), and reiterated his Jackson Holehawkish speech, noting they will not stop until the job's done.
It is now either do or die when it comes to risk assets. There are two options: an immediate rally this week, or a more gradual decline in valuations and prices.
As long-term bull-biased Bitcoin proponents, our thesis at Bitcoin Magazine Pro is that macroeconomic headwinds are driving the market. Given the volatility in global currencies and bond markets, we believe the panic moment has yet not arrived. While we are flexible and open to changing our stance, as market analysts, it is not impossible for us to see and report on what is happening. We'll get to this in a moment.
On-Chain
On-chain cyclical metrics are useful in assessing long-term value buying or selling opportunities, but we haven't highlighted them as much over the past few months because we feel they are less relevant to price action than current macro headwinds.
When looking at the history and bitcoin market cycles, one notices immediately the consistent fall in bitcoin prices below their realized price (the average cost basis of all bitcoins as per their last movement via on-chain). This is the case during bear markets. This has happened in previous cycles. However, it's not a rare event. It is a cycle that comes with time. For months, we have been stressing that the bear market can last longer that most people expect. The duration component is much more painful than the percentage drawdown.
"As an average holder is underwater most marginal sellers have already started to sell their holdings. While further downside may be possible, the 'pain market participants feel it in the form a prolonged period spent underwater rather that rapidly declining prices which characterized the beginning of the bear market." When will the Bear Market End? July 11, 2022
The daily BTC/USD exchange rate is completely set at the margin. Given the growing macroeconomic headwinds marginal sellers will likely continue to dominate marginal buyers up until a significant change in liquidity conditions.
This zoomed-in view shows how the capitulation process transfers the coins into more powerful, and better-capitalized hands.
The realized price of Bitcoin is weighted to show that we are in bear territory, but there is still room for improvement.
The realized market cap, which tracks the growth in bitcoin's price over time, is a reassuring chart for those who see this as the right time to buy long-term, undervalued bitcoin. The cost basis has dropped by a maximum 24.07% over the cycle highs, and it is currently at 12.71%. This chart is what most non-bitcoin investors are not able to see. Despite the volatility of the exchange rate, even in the "everything speculation" bubble that bitcoin is part of, the cost base of the network is always increasing or decreasing.
The cost base is at 12.71%.
Frequently Asked Questions
How much should your IRA include precious metals
You should remember that precious metals are not only for the wealthy. You don’t need to have a lot of money to invest. There are many ways to make money on silver and gold investments without spending too much.
You might also be interested in buying physical coins, such bullion rounds or bars. Stocks in companies that produce precious materials could be purchased. Or, you might want to take advantage of an IRA rollover program offered by your retirement plan provider.
You will still reap the benefits of owning precious metals, regardless of which option you choose. Although they aren’t stocks, they offer the possibility for long-term gains.
Their prices rise with time, which is a different to traditional investments. So, if you decide to sell your investment down the road, you'll likely see more profit than you would with traditional investments.
Should You Buy Gold?
In times past, gold was considered a safe haven for investors in times of economic trouble. 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.
Experts think this could change quickly. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
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.
- First, consider whether or not you need the money you're saving for retirement. It is possible to save for retirement while still investing your gold savings. The added protection that gold provides when you retire is a good option.
- Second, make sure you understand what you're getting yourself into before you start buying gold.There are several different types of gold IRA accounts available. Each one offers different levels security and flexibility.
- Keep in mind that gold may not be as secure as a bank deposit. It is possible to lose your gold coins.
If you are thinking of buying gold, do your research. Protect your gold if you already have it.
Do You Need to Open a Precious Metal IRA
You should be aware that precious metals cannot be covered by insurance. If you lose money in your investment, nothing can be done to recover it. This includes investments that have been damaged by fire, flooding, theft, and so on.
This type of loss can be avoided by investing in physical silver and gold coins. These items have been around thousands of years and are irreplaceable. These items are worth more today than they were when first produced.
Choose a reputable company with competitive rates and quality products if you are looking to open an IRA. A third-party custodian is a good option. They will protect your assets while giving you easy access whenever you need them.
When you open an account, keep in mind that you won't receive any returns until your retirement. Don't forget the future!
Statistics
- (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)
- 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)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (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)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
External Links
investopedia.com
irs.gov
bbb.org
cftc.gov
How To
The best place to buy silver or gold online
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 hard to use, so most people prefer jewelry made of it to real bars of gold.
There are two types currently available: legal tender and bullion. Legal tender coins are designed for circulation in a country. They often have denominations like $1 or $5 or $10.
Bullion coins should only be used for investment purposes. Inflation can cause their value to increase.
They cannot be used in currency exchanges. One example is that if someone buys $100 worth gold, they get 100 grams with a $100 value. The buyer receives 1 gram of gold for every dollar spent.
The next thing you should know when looking to buy gold is where to do it from. There are a few options if you wish to buy gold directly from a dealer. You can start by visiting your local coin shop. You can also try going through a reputable website like eBay. You can also look into buying gold online from private sellers.
Private sellers are individuals who offer gold for sale, either at wholesale prices or retail prices. Private sellers charge a 10% to 15% commission per transaction. That means you would get back less money from a private seller than from a coin shop or eBay. However, this option is often a great choice when investing in gold since it gives you more control over the item's price.
Another option for buying gold is to invest in physical gold. Although physical gold is easier to store than paper certificates you will still need to ensure it is safe. Physical gold should be stored in an impenetrable container, such a vault and safety deposit box to ensure its safety.
To purchase gold by yourself, you can visit a bank and a pawnshop. A bank can give you a loan up to the amount you intend to invest in Gold. These are small businesses that let customers borrow money against the items they bring to them. Banks usually charge higher interest rates that pawn shops.
You can also ask for help to purchase gold. Selling gold is also easy. A company such as GoldMoney.com can help you set up a simple bank account and get paid immediately.
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By: Dylan LeClair And Sam Rule
Title: Is The Bottom In For The Bitcoin Price?
Sourced From: bitcoinmagazine.com/markets/is-the-bottom-in-for-the-bitcoin-price
Published Date: Sat, 24 Sep 2022 02:00:00 GMT
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