Potential for a Price Rise
Bitcoin has experienced an impressive surge of over 150% in 2023, capturing the attention of Wall Street and sparking a race among firms to launch the first-ever Bitcoin exchange-traded fund (ETF). The upcoming decision by the U.S. Securities and Exchange Commission (SEC) on the approval of a spot Bitcoin ETF, scheduled for January 10, has become the center of attention.
If history is any indication, the SEC's ruling will have a significant impact on Bitcoin's price, although the direction of this impact remains uncertain. Proponents of a Bitcoin ETF argue that its approval would pave the way for a flood of institutional and retail investments, driving the price of Bitcoin to new heights.
Looking back at previous instances, the price of Bitcoin soared to over $1,400 in 2017 due in part to the anticipation of the first Bitcoin ETF. This was a substantial increase from the lows experienced in the $600 range just a year earlier. Investors at the time believed that the introduction of a Bitcoin ETF would facilitate the entry of institutional money into the market, leading to a buying frenzy. However, the SEC ultimately rejected the proposal, resulting in a sharp decline in Bitcoin's price, which quickly dropped below $1,000.
Despite this setback, the introduction of Bitcoin futures in 2017 brought renewed attention to the market, and Bitcoin surged above $20,000 that year. Similarly, in 2021, Bitcoin rallied to all-time highs, surpassing $60,000. The successful launch of Bitcoin futures ETFs in Canada and Europe played a role in this rally, as these ETFs allowed investors to gain exposure to Bitcoin without directly holding the cryptocurrency. The anticipation of a similar product in the U.S. contributed to the bullish sentiment. Moreover, the circulation of fake news regarding an ETF approval earlier this year resulted in a significant price increase for Bitcoin within minutes, indicating the likelihood of upside volatility upon approval.
Potential for a Price Fall
On the other hand, there are arguments suggesting that the approval of a Bitcoin ETF could lead to a price correction. Some market experts express concerns that the ETF could become a target for short sellers, leading to increased volatility. There is also the possibility of the ETF being considered a "sell the news event," where investors sell off their positions after the approval.
Furthermore, the approval of a Bitcoin ETF may trigger greater regulatory scrutiny of the cryptocurrency market as a whole. This increased oversight could result in higher taxation, stricter reporting requirements, and potential restrictions on the use of Bitcoin, which might dampen investor enthusiasm. Additionally, some believe that the market may have already priced in the possibility of a Bitcoin ETF approval, and a decision to deny it could lead to disappointment and a sell-off similar to what was witnessed in 2017 when the Winklevoss Bitcoin ETF was rejected.
Factors Influencing Bitcoin's Price
While the final decision by the SEC is eagerly awaited by the crypto community, it is important to remember that it is just one of many factors that can influence Bitcoin's price. Market sentiment, macroeconomic conditions, and geopolitical events will also play significant roles in shaping the future of the coin.
Conclusion
In conclusion, Bitcoin's price stands at a crossroads as investors anxiously await the SEC's decision on the Bitcoin ETF. Previous instances have demonstrated the substantial impact that ETF expectations can have on Bitcoin's price. However, it is crucial to consider the broader market dynamics. Whether Bitcoin's price rises or falls after the SEC ruling will depend on a multitude of factors, including how the market interprets and reacts to the decision.
As the crypto world holds its breath, the future of Bitcoin remains uncertain. Nevertheless, this is undeniably a pivotal moment for the world's only decentralized cryptocurrency.
Frequently Asked Questions
Can I purchase gold with my self directed IRA?
While you can purchase gold from your self-directed IRA (or any other brokerage firm), you must first open a brokerage account such as TD Ameritrade. If you have an existing retirement account, you can transfer funds to another one.
The IRS allows individuals up to $5.500 annually ($6,500 if you are married and filing jointly). This can be contributed to a traditional IRA. Individuals are allowed to contribute $1,000 each ($2,000 if married or filing jointly) to a Roth IRA.
If you do decide you want to invest your money in gold, you should look into purchasing physical bullion instead of futures contracts. Futures contracts, which are financial instruments based upon the price of gold, are financial instruments. They allow you to speculate on future prices without owning the metal itself. But physical bullion refers to real gold and silver bars you can carry in your hand.
How does a Gold IRA account work?
The Gold Ira Accounts are tax-free investment options for those who want to make investments in precious metals.
You can purchase physical bullion gold coins at any point in time. To invest in gold, you don't need to wait for retirement.
An IRA allows you to keep your gold forever. Your gold holdings will not be subject to tax when you are gone.
Your heirs can inherit your gold and avoid capital gains taxes. Because your gold doesn't belong to the estate, it's not necessary to include it on your final estate plan.
To open a IRA for gold, you must first create an individual retirement plan (IRA). After you have done this, an IRA custodian will be assigned to you. This company acts as an intermediary between you and IRS.
Your gold IRA custody will take care of the paperwork and send the forms to IRS. This includes filing annual reports.
Once your gold IRA is established, you can purchase gold bullion coins. The minimum deposit required to purchase gold bullion coins is $1,000 The minimum deposit is $1,000. However, you will receive a higher percentage of interest if your deposit is greater.
Taxes will apply to gold that you take out of an IRA. If you take out the whole amount, you'll be subject to income taxes as well as a 10 percent penalty.
You may not be required to pay taxes if you take out only a small amount. However, there are some exceptions. However, there are exceptions. If you take 30% or more of your total IRA asset, you'll owe federal Income Taxes plus a 20% penalty.
You shouldn't take out more then 50% of your total IRA assets annually. If you do, you could face severe financial consequences.
Is buying gold a good retirement plan?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
The best form of investing is physical bullion, which is the most widely used. There are other ways to invest gold. You should research all options thoroughly before making a decision on which option you prefer.
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. If you require cash flow, gold stocks can work well.
You can also invest your money in exchange-traded fund (ETFs), which give you exposure to the gold price by holding securities related to gold. These ETFs usually include stocks of precious metals refiners or gold miners.
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)
- 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)
- 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)
- 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)
External Links
wsj.com
- Saddam Hussein's InvasionHelped Uncage a Bear In 1991 – WSJ
- Are you interested in keeping gold in your IRA at-home? It's not legal – WSJ
investopedia.com
- Do You Need a Gold IRA to Get Retirement?
- What are the Options Types, Spreads, Example, and Risk Metrics
forbes.com
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
irs.gov
How To
Investing in gold vs. investing in stocks
This might make it seem very risky to invest gold as an investment tool. The reason behind this is that many people believe that gold is no longer profitable to invest in. This belief stems from the fact that most people see gold prices being driven down by the global economy. They think that they would lose money if they invested in gold. In reality, however there are still many significant benefits to gold investing. Below are some of them.
The oldest form of currency known to mankind is gold. It has been in use for thousands of year. It is a valuable store of value that has been used by many people throughout the world. Even today, countries such as South Africa continue to rely heavily on it as a form of payment for their citizens.
The first point to consider when deciding whether or not you should invest in gold is what price you want to pay per gram. The first thing you should do when considering buying gold bullion is to decide how much you will spend per gram. You can always ask a local jeweler what the current market rate is if you don't have it.
It is important to remember that even though gold prices have dropped in recent times, the cost of making gold has risen. So while the price of gold has declined, production costs haven't changed.
The amount of gold that you are planning to purchase is another important consideration when deciding whether or not gold should be bought. It makes sense to save any gold you don't need to purchase if your goal is to use it for wedding rings. But, if your goal is to make long-term investments in gold, this might be worth considering. It is possible to make a profit by selling your gold at higher prices than when you purchased it.
We hope you have gained a better understanding about gold as an investment tool. We strongly recommend that you research all available options before making any decisions. Only then can you make informed decisions.
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By: Reed Macdonald
Title: The Impact of a Bitcoin ETF Approval on Bitcoin's Price: A Crucial Decision by the SEC
Sourced From: bitcoinmagazine.com/markets/why-the-bitcoin-price-will-rise-or-fall-on-the-secs-spot-etf-ruling
Published Date: Tue, 02 Jan 2024 13:49:59 GMT
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