JPMorgan Analyst Highlights Impact of Spot Bitcoin ETF Launches
Global investment bank JPMorgan has issued a warning regarding additional outflow from Grayscale's bitcoin fund, stating that it will exert "further pressure on bitcoin prices over the coming weeks." The bank's analyst, Nikolaos Panigirtzoglou, also explained that the recent $3 billion influx into new spot bitcoin exchange-traded funds (ETFs) represents a shift from existing bitcoin investment vehicles or a move by retail investors from digital wallets held with exchanges/retail brokers to more cost-effective spot bitcoin ETFs.
Bitcoin Price Declines Following Spot Bitcoin ETF Launches
JPMorgan analyst Nikolaos Panigirtzoglou shared his outlook on the price of bitcoin on Linkedin, specifically addressing the impact of spot bitcoin ETF launches and outflows from Grayscale's bitcoin fund. Grayscale converted its bitcoin trust (GBTC) into a spot bitcoin ETF after receiving approval from the U.S. Securities and Exchange Commission (SEC) along with 10 other funds on January 10.
"Since the launch of spot bitcoin ETFs last week, the price of bitcoin has declined by more than 10%," described the JPMorgan analyst. "It appears that profit-taking, driven by the 'buy the rumor/sell the fact' dynamics, has taken place in recent days, as we had previously anticipated. The price of BTC initially rose above $47,000 in anticipation of the spot bitcoin ETF approval but dropped after the approval. At the time of writing, the cryptocurrency is trading at $41,697."
Outflow from Grayscale's Bitcoin Fund
According to Panigirtzoglou, the $1.5 billion outflow from Grayscale's GBTC fund has had a negative impact on bitcoin prices. He noted that GBTC investors, who had been purchasing the fund at a significant discount to its net asset value (NAV) in anticipation of its eventual ETF conversion, have chosen to exit the bitcoin space entirely instead of transitioning to cheaper spot bitcoin ETFs.
The JPMorgan analyst previously estimated that approximately $3 billion was invested in GBTC in the secondary market during 2023, taking advantage of the NAV discount. He explained that if his estimate is accurate and considering that $1.5 billion has already exited, there could be an additional $1.5 billion that will exit the bitcoin space through profit-taking on GBTC, further putting pressure on bitcoin prices in the coming weeks.
Outflows from Grayscale's Bitcoin ETF and Inflows to Other Spot Bitcoin ETFs
Since January 12, Grayscale's bitcoin ETF has experienced an outflow of 50,106.59 BTC, valued at over $2 billion. Panigirtzoglou also analyzed the performance of other spot bitcoin ETFs launched on January 11, including Blackrock's Ishares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin Fund (FBTC). He noted that these ETFs received significant inflows of $3 billion in just four days, which is comparable to the inflows observed during previous bitcoin product launches such as CME bitcoin futures or futures-based bitcoin ETFs.
As expected, most of the $3 billion inflow into these spot bitcoin ETFs represents a shift from existing bitcoin investment vehicles, such as futures-based bitcoin ETFs, which experienced outflows of around $300 million since last Thursday. Additionally, retail investors have been transitioning from digital wallets held with exchanges/retail brokers to more cost-effective spot bitcoin ETFs.
What are your thoughts on JPMorgan's bitcoin price prediction and the estimated outflow from Grayscale? Share your opinions in the comments section below.
Frequently Asked Questions
Is buying gold a good retirement plan?
Although buying gold as an investment might not sound appealing at first, when you look at the average annual gold consumption worldwide, it is worth looking into.
The best form of investing is physical bullion, which is the most widely used. However, there are many other ways to invest in gold. Research all options carefully and make an informed decision about what you desire from your investments.
If you don't want to keep your wealth safe, buying shares in companies that extract gold and mining equipment could be a better choice. Owning gold stocks should work well if you need cash flow from your investment.
ETFs are an exchange-traded investment that allows you to gain exposure to the market for gold. You hold gold-related securities and not actual gold. These ETFs often include stocks of gold miners, precious metals refiners, and commodity trading companies.
What are the advantages of 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 have complete control over how much you take out each year. There are many types available. Some are better suited for people who want to save for college expenses. Others are designed for investors looking for higher returns. Roth IRAs, for example, allow people to contribute after they turn 59 1/2. They also pay taxes on any earnings when they retire. These earnings don't get taxed if they withdraw funds. This type account may make sense if it is your intention to retire early.
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 of owning gold through an IRA is that you get to enjoy the convenience of automatic withdrawals. It means that you don’t have to remember to make deposits every month. Direct debits could be set up to ensure you don't miss a single payment.
Finally, gold is one the most secure investment options available. It is not tied to any country so its value tends stay 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.
Who is the owner of the gold in a gold IRA
The IRS considers gold owned by an individual to be “a type of money” and is subject taxation.
You must have at least $10,000 in gold and keep it for at most five years to qualify for this tax-free status.
Gold can be used to protect against inflation and price volatility. However, it is not a good idea to own gold if you don't intend to use it.
If you plan to eventually sell the gold, you'll need a report on its value. This could impact the amount of capital gains taxes your owe if you cash in your investments.
You should consult a financial planner or accountant to see what options are available to you.
How to Open a Precious Metal IRA
The first step is to decide if you want an Individual Retirement Account (IRA). Open the account by filling out Form 8606. For you to determine the type and eligibility for which IRA, you need Form 5204. This form should be filled within 60 calendar days of opening the account. After this, you are ready to start investing. You may also choose to contribute directly from your paycheck using payroll deduction.
Complete Form 8903 if your Roth IRA option is chosen. The process for an ordinary IRA will not be affected.
To qualify for a precious-metals IRA, you'll need to meet some requirements. The IRS says you must be 18 years old and have earned income. You can't earn more than $110,000 per annum ($220,000 in married filing jointly) for any given tax year. Contributions must be made regularly. These rules will apply regardless of whether your contributions are made through an employer or directly out of your paychecks.
You can use a precious metals IRA to invest in gold, silver, palladium, platinum, rhodium, or even platinum. But, you'll only be able to purchase physical bullion. You won't have the ability to trade stocks or bonds.
Your precious metals IRA can be used to directly invest in precious metals-related companies. This option is available from some IRA providers.
There are two major drawbacks to investing via an IRA in precious metals. First, they aren't as liquid than stocks and bonds. This makes them harder to sell when needed. Second, they don't generate dividends like stocks and bonds. Therefore, you will lose more money than you gain over time.
Is it possible to hold a gold ETF within a Roth IRA
A 401(k) plan may not offer this option, but you should consider other options, such as an Individual Retirement Account (IRA).
Traditional IRAs allow contributions from both the employer and employee. An Employee Stock Ownership Plan (ESOP) is another way to invest in publicly traded companies.
An ESOP can provide tax advantages, as employees are allowed to share in company stock and the profits generated by the business. The money you invest in the ESOP will be taxed at a lower rate than if it were directly held by the employee.
Also available is an Individual Retirement Annuity. With an IRA, you make regular payments to yourself throughout your lifetime and receive income during retirement. Contributions made to IRAs are not taxable.
How much gold can you keep in your portfolio
The amount of money you need to make depends on how much capital you are looking for. If you want to start small, then $5k-$10k would be great. As you grow, you can move into an office and rent out desks. This will allow you to pay rent monthly, and not worry about it all at once. You just pay per month.
Consider what type of business your company will be running. My website design company charges clients $1000-2000 per month depending on the order. You should also consider the expected income from each client when you do this type of thing.
As freelance work requires you to be paid freelancers, your monthly salary won't be as high as mine. So you might only get paid once every 6 months or so.
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 would recommend that you start with $1k-2k worth of gold and then increase your wealth.
Statistics
- 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)
- (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)
- 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)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
External Links
bbb.org
forbes.com
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
irs.gov
wsj.com
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- Do you want to keep your IRA gold at home? It's Not Exactly Legal – WSJ
How To
Guidelines for Gold Roth IRA
You should start investing early to ensure you have enough money for retirement. It is best to start saving for retirement as soon you can (typically at age 50). It is essential to save enough money each year in order to maintain a steady growth rate.
You can also take advantage of tax-free savings opportunities like a traditional 401k (k), SEP IRA (or SIMPLE IRA). These savings vehicles let you make contributions and not pay taxes until the earnings are withdrawn. They are a great option for those who do not have access to employer matching money.
Save regularly and continue to save over time. If you aren't contributing the maximum amount permitted, you could miss out on tax benefits.
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By: Kevin Helms
Title: JPMorgan Warns of Additional Outflow from Grayscale Bitcoin Fund, Putting Pressure on Bitcoin Prices
Sourced From: news.bitcoin.com/jpmorgan-warns-of-incoming-bitcoin-selloff-with-anticipated-3-billion-grayscale-outflow/
Published Date: Mon, 22 Jan 2024 01:00:46 +0000
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