Bitcoin Selloff and Grayscale Outflows
Global investment bank JPMorgan recently commented on the crypto market, stating that the profit-taking from Grayscale's bitcoin trust (GBTC) has mostly occurred. This suggests that the downward pressure on bitcoin caused by GBTC should be largely in the past.
The recent bitcoin selloff led to a drop in BTC's price from above $47,000 to below $39,000 after the approval of the spot bitcoin exchange-traded funds (ETFs). Alongside this selloff, there were significant outflows from Grayscale's bitcoin trust, which transformed into a spot bitcoin ETF following regulatory approval.
Since January 12, GBTC's bitcoin holdings decreased by 114,367.39 BTC, equivalent to approximately $4.77 billion based on the BTC exchange rates as of January 27.
JPMorgan's Analysis
JPMorgan strategist Nikolaos Panigirtzoglou stated that around $4.3 billion has already left GBTC, suggesting that most of the profit-taking from GBTC has already taken place. He further expressed that this implies that the downward pressure on bitcoin caused by GBTC should now be mostly behind us.
Another JPMorgan analyst, Kenneth Worthington, offered a different perspective. He believes that the catalyst of bitcoin ETFs, which has brought the ecosystem out of its winter, will disappoint market participants. As a result, the investment bank downgraded Coinbase stock from Neutral to Underweight.
Other Analysts' Views
John Todaro from Needham also shared his opinion, noting that there has been a slowdown in the outflows from GBTC. He highlighted that while it is difficult to determine the exact amount that will leave GBTC, the two major drivers of selling, namely outflows driven by the FTX estate and arbitrage funds, are nearly complete.
Conclusion
Overall, JPMorgan's analysts have provided insights into the impact of profit-taking from Grayscale's bitcoin trust on the price of bitcoin. While one analyst believes that most of the downward pressure from GBTC has already occurred, another analyst holds a more skeptical view regarding the impact of bitcoin ETFs. It remains to be seen how these factors will influence the price of bitcoin in the future.
What are your thoughts on JPMorgan analyst Nikolaos Panigirtzoglou's assessment? Share your opinion in the comments section below.
Frequently Asked Questions
What precious metal should I invest in?
This depends on what risk you are willing take and what kind of return you desire. Although gold has been considered a safe investment, it is not always the most lucrative. You might not want to invest in gold if you're looking for quick returns. Silver is a better investment if you have patience and the time to do it.
If you don’t desire to become rich quickly, gold may be your best option. If you are looking for a long-term investment that will provide steady returns, silver may be a better choice.
What is the Performance of Gold as an Investment?
The price of gold fluctuates based on supply and demand. It is also affected negatively by interest rates.
Because of their limited supply, gold prices can fluctuate. Physical gold is not always in stock.
What Should Your IRA Include in 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. In fact, there are many ways to make money from gold and silver investments without spending much money.
You might also be interested in buying physical coins, such bullion rounds or bars. Shares in precious metals-producing companies could be an option. You might also want to use an IRA rollover program offered through your retirement plan provider.
You will still reap the benefits of owning precious metals, regardless of which option you choose. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
Their prices rise with time, which is a different to traditional investments. This means that if you decide on selling your investment later, you'll likely get more profit than you would with traditional investing.
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. This makes an IRA great for people who want to save money but don't want to pay tax on the interest they 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. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. If you do withdraw funds, you'll need to pay a penalty.
You will also need to pay fees for managing your IRA. Most banks charge 0.5% to 2.0% per annum. Other providers charge monthly management costs ranging from $10-50.
Insurance will be required if you would like to keep your cash out of banks. In order to make a claim, most insurers will require that you have a minimum amount in gold. Insurance that covers losses upto $500,000.
If you decide to open a gold IRA, it is important to know how much you can use. 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. Futures contracts for gold are less expensive than physical gold. Futures contracts provide flexibility for purchasing gold. You can set up futures contracts with a fixed expiration date.
Also, you will need to decide on the type of insurance coverage you would like. The standard policy doesn't include theft protection or loss due to fire, flood, or earthquake. However, it does cover damage caused by natural disasters. You might consider purchasing additional coverage if your area is at high risk.
Insurance is not enough. You also need to think about the cost of gold storage. Insurance won't cover storage costs. In addition, most banks charge around $25-$40 per month for safekeeping.
Before you can open a gold IRA you need to contact a qualified Custodian. Custodians keep track of your investments and ensure compliance with federal regulations. Custodians don't have the right to sell assets. Instead, they must keep your assets for as long you request.
Once you've decided which type of IRA best suits your needs, you'll need to fill out paperwork specifying your goals. Your plan should include information about the investments you want to make, such as stocks, bonds, mutual funds, or real estate. Your monthly investment goal should be stated.
Once you have completed the forms, you will need to mail them to your provider with a check and a small deposit. The company will then review your application and mail you a letter of confirmation.
Consider consulting a financial advisor when opening a golden IRA. A financial planner is an expert in investing and can help you choose the right type of IRA for you. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
How much should you have of gold in your portfolio
The amount of money you need to make depends on how much capital you are looking for. For a small start, $5k to $10k is a good range. Then as you grow, you could move into an office space and rent out desks, etc. So you don't have all the hassle of paying rent. Rent is only paid per month.
It's also important to determine what type business you'll run. In my case, we charge clients between $1000-2000/month, depending on what they order. This is why you should consider what you expect from each client if you're doing this kind of thing.
Because freelance work pays freelancers, you won't likely get a monthly income if you do freelance work. You may get paid just once every 6 months.
You must first decide what kind and amount of income you are looking to generate before you can calculate how much gold will be needed.
I recommend starting with $1k to $2k of gold, and then growing from there.
Who holds the gold in a gold IRA?
The IRS considers an individual who owns gold as holding “a form of money” subject to taxation.
To take advantage of this tax-free status, you must own at least $10,000 worth of gold and have been storing it for at least five years.
The purchase of gold can protect you from inflation and price volatility. But it's not smart to hold it if your only intention is 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.
You should consult a financial planner or accountant to see what options are available to you.
What should I pay into my Roth IRA
Roth IRAs are retirement accounts where you deposit your own money tax-free. You can't withdraw money from these accounts before you reach the age of 59 1/2. If you decide to withdraw some of your contributions, you will need to follow certain rules. First, your principal (the deposit amount originally made) is not transferable. You cannot withdraw more than the original amount you contributed. You must pay taxes on the difference if you want to take out more than what you initially contributed.
The second rule states that income taxes must be paid before you can withdraw earnings. So, when you withdraw, you'll pay taxes on those earnings. Let's suppose that you contribute $5,000 annually to your Roth IRA. In addition, let's assume you earn $10,000 per year after contributing. You would owe $3,500 in federal income taxes on the earnings. The remaining $6,500 is yours. Because you can only withdraw what you have initially contributed, this is all you can take out.
Therefore, even if you take $4,000 out of your earnings you still owe taxes on $1,500. You would also lose half of your earnings because they are subject to another 50% tax (half off 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.
There are two types if Roth IRAs, Roth and Traditional. A traditional IRA allows you to deduct pre-tax contributions from your taxable income. Your traditional IRA can be used to withdraw your balance and interest when you are retired. You can withdraw as much as you want from a traditional IRA.
Roth IRAs do not allow you to deduct your contributions. After you have retired, the full amount of your contributions and accrued interest can be withdrawn. There is no minimum withdrawal amount, unlike traditional IRAs. You don’t have to wait for your turn 70 1/2 years before you can withdraw your contributions.
Statistics
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (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)
- 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)
External Links
forbes.com
cftc.gov
wsj.com
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- Do you want to keep your IRA gold at home? It's Not Exactly Legal – WSJ
investopedia.com
How To
How to Hold Physical Gold in an IRA
The easiest way to invest is to buy shares in companies that make gold. This method is not without risks. There's no guarantee these companies will survive. Even if the company survives, they still face the risk of losing their investment due to fluctuations in gold's price.
You can also buy gold directly. You'll need to open a bank account, buy gold online from a trusted seller, or open an online bullion trading account. This option offers the advantages of being able to purchase gold at low prices and easy access (you don’t need to deal directly with stock exchanges). It's also easy to see how many gold you have. The receipt will show exactly what you paid. You'll also know if taxes were not paid. There's also less chance of theft than investing in stocks.
There are however some disadvantages. For example, you won't benefit from banks' interest rates or investment funds. Additionally, you won’t be able diversify your holdings. You will remain with the same items you bought. Finally, the taxman might want to know where your gold has been placed!
If you'd like to learn more about buying gold in an IRA, visit the website of BullionVault.com today!
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By: Kevin Helms
Title: JPMorgan Analyst: Downward Pressure on Bitcoin from Grayscale Profit-Taking Should be Behind Us
Sourced From: news.bitcoin.com/jpmorgan-sees-downward-pressure-easing-for-bitcoin-as-grayscale-profit-taking-fades/
Published Date: Sun, 28 Jan 2024 00:30:17 +0000
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