Introduction
On Monday, renowned trader Peter Brandt revealed that he has taken a short position on ethereum (ETH), the second-largest cryptocurrency by market capitalization. Brandt shared his strategy with his 707,000 followers on X (previously known as Twitter), along with a technical chart to illustrate his decision.
The Surge in Ethereum's Value
Since the beginning of 2023, the value of ethereum has surged by 85% against the U.S. dollar. This significant increase can be attributed to several key factors. Firstly, there have been talks within the crypto community about a potential approval of a spot ethereum exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC). This news has fueled a bullish outlook in the market. Additionally, onchain analytics have shown a notable increase in ETH accumulation by major holders, indicating a positive shift in market dynamics.
A Minor Dip in Ethereum's Value
However, in the past two weeks, ethereum's upward trajectory has plateaued, experiencing a minor 1.4% dip in value against the U.S. dollar. On December 18, 2023, Peter Brandt, an experienced trader active since 1975, shared an ETH/USD chart from Tradingview. Brandt mentioned that classical chart patterns in price charts do not always perform as expected. He stated that if the rising wedge in ethereum complies with the script, the target price could be $1,000, then $650.
Brandt's Short Position on ETH
Peter Brandt further revealed that he has taken a short position on ethereum. Shorting in financial markets involves betting against the asset, in this case, ETH, and anticipating a decline in its value. If the decline occurs, it results in a profit from the short position. Brandt's decision is in line with the sentiment shared by Adamant Capital founder Tuur Demeester, who pointed to a chart illustrating ETH's performance against BTC over five years. Colin Talks Crypto also agreed, stating that the ETH/BTC chart looks unfavorable and may soon break down. The anticipation is that BTC ETFs could be the catalyst for this breakdown.
Potential Reversal and Bearish Pattern
The ethereum chart does display indications of a potential reversal, although the pattern highlighted by Brandt is not yet fully formed. Currently, there is a bearish pattern characterized by consistently flat lower highs and a series of lower lows. This suggests that sellers are currently more assertive than buyers. However, it is common for crypto assets to experience periods of low trading volume during holidays, which bears might take advantage of. Therefore, it is plausible that ethereum's descending triangle formation could be a temporary phenomenon.
Peter Brandt's Views on Crypto Assets
Peter Brandt has been vocal about his views on crypto assets and economic matters for an extended period. In August, he referred to the impending Bitcoin halving as a non-event. He has also advocated for the U.S. Federal Reserve to increase the benchmark interest rate by 100 basis points. Brandt holds the opinion that bitcoin (BTC) is a legacy coin, while dismissing most other cryptocurrencies as mere crypto wannabees.
Conclusion
Peter Brandt's decision to take a short position on ethereum has sparked discussions within the crypto community. As an experienced trader, Brandt's insights and strategies carry weight in the market. It remains to be seen how this short position will unfold and whether it will have a significant impact on ethereum's value. Share your thoughts and opinions about Peter Brandt's decision in the comments section below.
Frequently Asked Questions
Who holds the gold in a gold IRA?
The IRS considers anyone who owns gold to be “a form money” and therefore subject to taxation.
You must have gold at least $10,000 and it must be stored for at the least five years in order to take advantage of this tax-free status.
While gold may be a great investment to help prevent inflation and volatility in the market, it's not wise to keep it if you won't use it.
You will need to declare the value of gold if you intend on selling it one day. This could impact how capital gains taxes you owe for cash investments.
Consult a financial advisor or accountant to determine your options.
How much should precious metals be included in your portfolio?
Before we can answer this question, it is important to understand what precious metals actually are. Precious metals are those elements that have an extremely high value relative to other commodities. They are therefore very attractive for investment and trading. Gold is by far the most common precious metal traded today.
But, there are other types of precious metals available, including platinum and silver. While gold's price fluctuates during economic turmoil, it tends to remain relatively stable. It is also unaffected significantly by inflation and Deflation.
In general, prices for precious metals tend increase with the overall marketplace. However, the prices of precious metals do not always move in sync with one another. For example, when the economy is doing poorly, the price of gold typically rises while the prices of other precious metals tend to fall. Investors expect lower interest rate, making bonds less appealing investments.
When the economy is healthy, however, the opposite effect occurs. Investors favor safe assets like Treasury Bonds, and less precious metals. Because they are rare, they become more pricey and lose value.
Diversifying across precious metals is a great way to maximize your investment returns. It is also a good idea to diversify your investments in precious metals, as prices tend to fluctuate.
How can I withdraw from a Precious metal IRA?
You first need to decide if you want to withdraw money from an IRA account. Make sure you have enough cash in your account to cover any fees, penalties, or charges that may be associated with withdrawing money from an IRA.
A taxable brokerage account is a better option than an IRA if you are prepared to pay a penalty for early withdrawals. If you decide to go with this option, you will need to take into account the taxes due on the amount you withdraw.
Next, you'll need to figure out how much money you will take out of your IRA. The calculation is influenced by several factors such as your age at withdrawal, the length of time you have owned the account and whether or not you plan to continue contributing to retirement plans.
Once you know how much of your total savings to convert to cash, it's time to choose the type of IRA that you want. Traditional IRAs allow you to withdraw funds tax-free when you turn 59 1/2 while Roth IRAs charge income taxes upfront but let you access those earnings later without paying additional taxes.
Once you have completed these calculations, you need to open your brokerage account. A majority of brokers offer free signup bonuses, as well as other promotions, to get people to open accounts. However, a debit card is better than a card. This will save you unnecessary fees.
You will need a safe place to store your coins when you are ready to withdraw from your precious metal IRA. Some storage facilities will take bullion bars while others require you only to purchase individual coins. You will need to weigh each one before making a decision.
Bullion bars require less space, as they don't contain individual coins. However, you'll need to count every coin individually. However, individual coins can be stored to make it easy to track their value.
Some prefer to store their coins in a vault. Others prefer to store them in a safe deposit box. Whichever method you choose, make sure you store your bullion safely so you can enjoy its benefits for years to come.
How much are gold IRA fees?
Six dollars per month is the fee for an Individual Retirement Account (IRA). This includes the account maintenance fees and any investment costs associated with your chosen investments.
If you wish to diversify your portfolio, you may need to pay additional fees. These fees will vary depending upon the type of IRA chosen. Some companies offer free checking, but charge monthly fees for IRAs.
A majority of providers also charge annual administration fees. These fees vary from 0% to 11%. The average rate per year is.25%. These rates are often waived if a broker like TD Ameritrade is used.
Is it a good idea to open a Precious Metal IRA
Precious metals are not insured. This is the most important fact to know before you open an IRA account. If you lose money in your investment, nothing can be done to recover it. This includes losing all your investments due to theft, fire, flood, etc.
Protect yourself against this type of loss by investing in physical gold or silver coins. These items are timeless and have a lifetime value. These items are worth more today than they were when first produced.
If you decide to open an IRA account, choose a reputable company that offers competitive rates and products. 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!
What should I pay into my Roth IRA
Roth IRAs let you save tax on retirement by allowing you to deposit your own money. The account cannot be withdrawn from until you are 59 1/2. However, if your goal is to withdraw funds before that time, there are certain rules you must observe. First, you can't touch your principal (the initial amount that was deposited). You cannot withdraw more than the original amount you contributed. If you wish to withdraw more than you originally contributed, you will have to pay taxes.
The second rule says that you cannot withdraw your earnings without paying income tax. Withdrawing your earnings will result in you paying taxes. Let's suppose that you contribute $5,000 annually to your Roth IRA. Let's also assume that you make $10,000 per year from your Roth IRA contributions. The federal income tax on your earnings would amount to $3,500. That leaves you with only $6,500 left. Because you can only withdraw what you have initially contributed, this is all you can take out.
If you took $4,000 from your earnings, you would still owe taxes for the $1,500 remaining. In addition, 50% of your earnings will be subject to tax again (half of 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.
There are two types of Roth IRAs: Traditional and Roth. Traditional IRAs allow you to deduct pretax contributions from your taxable income. To withdraw your retirement contribution balance plus interest, your traditional IRA is available to you. You can withdraw as much as you want from a traditional IRA.
Roth IRAs don't allow you deduct contributions. You can withdraw your entire contribution, plus accrued interests, after you retire. There is no minimum withdrawal requirement, unlike traditional IRAs. Your contribution can be withdrawn at any age, not just when you reach 70 1/2.
How to Open a Precious Metal IRA?
The first step in opening an Individual Retirement Account, (IRA), is to decide if it's something you want. You must complete Form 8606 to open an account. Next, fill out Form 5204. This will determine the type of IRA that you are eligible for. You must complete this form within 60 days of opening your account. You can then start investing once you have this completed. You might also be able to contribute directly from the paycheck through payroll deduction.
You must complete Form 8903 if you choose a Roth IRA. Otherwise, the process is identical to an ordinary IRA.
To be eligible for a precious metals IRA, you will need to meet certain requirements. The IRS stipulates that you must have earned income and be at least 18-years old. For any tax year, your earnings must not exceed $110,000 ($220,000 for married filing jointly). Contributions must be made regularly. These rules apply whether you're contributing through an employer or directly from your paychecks.
An IRA for precious metals allows you to invest in gold and silver as well as platinum, rhodium, and even platinum. However, physical bullion will not be available for purchase. This means you can't trade shares of stock and bonds.
You can also use your precious metals IRA to invest directly in companies that deal in precious metals. Some IRA providers offer this option.
However, there are two significant drawbacks to investing in precious metals via an IRA. First, they don't have the same liquidity as stocks or bonds. This makes them harder to sell when needed. Second, they are not able to generate dividends as stocks and bonds. So, you'll lose money over time rather than gain it.
Statistics
- 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)
- 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)
- 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)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
External Links
cftc.gov
law.cornell.edu
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement account
investopedia.com
irs.gov
How To
Investing In Gold vs. Investing In Stocks
Gold investing as an investment vehicle can seem extremely risky these days. Many people believe that investing in gold is not profitable. This belief is based on the fact that gold prices are being driven down by global economic conditions. They fear that investing in gold will result in a loss of money. There are many benefits to investing in gold. Below are some of them.
One of the oldest forms known of currency is gold. Its use can be traced back to thousands of years ago. It is a valuable store of value that has been used by many people throughout the world. It's still used by countries like South Africa as a method of payment.
When deciding whether to invest in gold, the first thing you need to do is to decide what price per gram you are willing to pay. You must determine how much gold bullion you can afford per gram before you consider buying it. You can always ask a local jeweler what the current market rate is if you don't have it.
It's also important to note that, although gold prices are down in recent months, the costs of producing it have risen. The price of gold may have fallen, but the production costs haven’t.
You should also consider the amount of your intended purchase when considering whether you should buy or not. If you intend to only purchase enough gold to cover your wedding rings it may be a smart decision to not buy any gold. This is not a wise decision if you're looking to invest in long-term assets. If you sell your gold for more than you paid, you can make a profit.
We hope this article helped you to gain a better appreciation of gold as a tool for investment. It is important to research all options before you make any decision. Only then can informed decisions be made.
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By: Jamie Redman
Title: Peter Brandt Takes a Short Position on Ethereum (ETH): What Does This Mean for the Market?
Sourced From: news.bitcoin.com/veteran-trader-peter-brandt-shorts-ethereum-signaling-potential-downturn/
Published Date: Tue, 19 Dec 2023 16:30:06 +0000
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