Understanding the Underestimated Potential
Vaneck's Director of Digital Assets Strategy, Gabor Gurbacs, sheds light on the long-term impact of spot bitcoin exchange-traded funds (ETFs) and why it is often underestimated. With the potential approval of a U.S. spot bitcoin ETF by the Securities and Exchange Commission (SEC), Gurbacs believes that bitcoin's price trajectory could emulate gold's blueprint from 2004, but at a much faster pace.
Bitcoin ETFs: Initial Impact and Beyond
Gurbacs acknowledges that people tend to overestimate the initial impact of U.S. bitcoin ETFs, which he expects to attract only a few hundred million dollars, primarily from recycled funds. However, he emphasizes that the broader picture is often overlooked. Bitcoin is revolutionizing its own capital markets systems and products, extending far beyond the scope of ETFs. This transformative potential is not yet fully priced in. Instead of focusing on which traditional financial institution adopts bitcoin, Gurbacs poses a more significant question: Which bitcoin company will be the next Blackrock?
Drawing Parallels with Gold
Gurbacs draws attention to the historical context of gold as a parallel for understanding the potential impact of a U.S. spot bitcoin ETF. He refers to his previous post on December 6, where he explains how the approval of such an ETF could generate trillions of dollars in value for bitcoin. He cites the introduction of the SPDR Gold Shares ETF (GLD) on November 18, 2004, as a case study. Over the subsequent eight years, gold's price quadrupled, soaring from $400 to $1,800, and adding approximately $8 trillion in market capitalization. Gold's market cap surged from around $2 trillion to approximately $10 trillion.
Bitcoin's Growth Trajectory
The Vaneck director highlights the disparity between the current market cap of bitcoin, which stands at around $750 billion, and gold's market cap in 2004. Bitcoin's market cap is less than one-third of what gold was at that time. However, Gurbacs suggests that if a U.S. spot bitcoin ETF is approved, bitcoin's price trajectory could mirror that of gold from 2004 and the subsequent years, but at an accelerated pace.
Gradual Adoption and Significance
Gurbacs predicts that the adoption of bitcoin exchange-traded products (ETPs) will contribute to the growth of the market, albeit not all at once. He estimates that only a few tens of billions of dollars will flow into bitcoin through ETPs. Nevertheless, he emphasizes that this boost will be substantial, considering the relatively low bitcoin float held by strong hands and long-term holders, as well as the systematic scarcity resulting from halving schedules.
Legitimization and Wider Adoption
Furthermore, Gurbacs believes that the approval of a spot bitcoin ETF will legitimize and destigmatize the inclusion of bitcoin in investment portfolios. This will pave the way for further adoption outside the realm of ETFs. The Vaneck director predicts that nation-states and sovereign wealth funds will directly hold bitcoin, securing optionality for mining and establishing their own bitcoin-based capital markets. He draws a parallel to gold, where central bank gold adoption, alongside ETPs, played a significant role in driving the price increase.
Your Opinion Matters
What is your perspective on the impact of spot bitcoin ETFs on bitcoin? Share your thoughts in the comments section below.
Frequently Asked Questions
How to Open a Precious Metal IRA
First, decide if an Individual Retirement Account is right for you. To open the account, complete Form 8606. Then you must fill out Form 5204 to determine what type of IRA you are eligible for. This form should be filled within 60 calendar days of opening the account. You can then start investing once you have this completed. You can also contribute directly to your paycheck via payroll deduction.
If you opt for a Roth IRA, you must complete Form 8903. Otherwise, the process is identical to an ordinary IRA.
To qualify for a precious-metals IRA, you'll need to meet some requirements. The IRS states that you must be at least 18 and have earned income. For any tax year, your earnings must not exceed $110,000 ($220,000 for married filing jointly). And, you have to make contributions regularly. These rules apply to contributions made directly or through employer sponsorship.
You can use a precious-metals IRA to purchase gold, silver and palladium. You can only purchase bullion in physical form. You won't have the ability to trade stocks or bonds.
You can also use your precious metals IRA to invest directly in companies that deal in precious metals. This option may be offered by some IRA providers.
An IRA is a great way to invest in precious metals. However, there are two important drawbacks. First, they are not as liquid or as easy to sell as stocks and bonds. This makes it harder to sell them when needed. Second, they are not able to generate dividends as stocks and bonds. Therefore, you will lose money over time and not gain it.
What are the fees for an IRA that holds gold?
A monthly fee of $6 for an Individual Retirement Account is charged. This includes account maintenance fees and investment costs for your chosen investments.
You may have to pay additional fees if you want to diversify your portfolio. These fees will vary depending upon the type of IRA chosen. Some companies offer free checking accounts, but charge monthly fees to open IRA accounts.
Many providers also charge annual management fees. These fees range from 0% to 1%. The average rate is.25% per year. However, these rates are typically waived if you use a broker like TD Ameritrade.
Is gold a good investment IRA option?
For anyone who wants to save some money, gold can be a good investment. You can also diversify your portfolio by investing in gold. There is much more to gold than meets your eye.
It has been used throughout the history of currency and remains a popular payment method. It's often referred to as “the world's oldest currency.”
Gold, unlike other paper currencies created by governments is mined directly from the earth. That makes it very valuable because it's rare and hard to create.
The supply and demand factors determine how much gold is worth. People tend to spend more when the economy is healthy, which means that fewer people are able to mine gold. The result is that gold's value increases.
On the flip side, people save cash for emergencies and don't spend it. This causes more gold to be produced, which lowers its value.
This is why both individuals as well as businesses can benefit from investing in gold. If you have gold to invest, you will reap the rewards when the economy expands.
Also, your investments will earn you interest which can help increase your wealth. If gold's value falls, you don't have to lose any of your investments.
Is the government allowed to take your gold
You own your gold and therefore the government cannot seize it. It is yours because you worked hard for it. It belongs entirely to you. There may be exceptions to this rule. You could lose your gold if convicted of fraud against a federal government agency. Your precious metals can also be lost if you owe tax to the IRS. However, even if taxes are not paid, gold is still your property.
Which precious metal is best to invest in?
This question depends on how risky you are willing to take, and what return you want. Gold has been traditionally considered a haven investment, but it's not always the most profitable choice. You might not want to invest in gold if you're looking for quick returns. You should invest in silver if you have the patience and time.
Gold is the best investment if you aren't looking to get rich quick. Silver might be a better investment option if steady returns are desired over a long period of time.
How does gold perform as an investment?
The supply and the demand for gold determine how much gold is worth. It is also affected negatively by interest rates.
Gold prices are volatile due to their limited supply. In addition, there is a risk associated with owning physical gold because you have to store it somewhere.
Statistics
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- (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)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (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)
- 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
irs.gov
bbb.org
law.cornell.edu
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement plans
finance.yahoo.com
How To
Investing in gold vs. investing in stocks
Investing in gold as an investment vehicle might seem like a very risky proposition these days. Many people believe that investing in gold is not profitable. This belief arises because most people believe that the global economy is driving down gold prices. People believe that investing in gold would result in them losing money. In reality, however, there are still significant benefits that you can get when investing in gold. Let's take a look at some of the benefits.
One of the oldest currencies known to man is gold. There are thousands of records that show gold was used over the years. It has been used as a store for value by people all over the globe. It is still used as a payment method by South Africa and other countries.
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 could contact a local jeweler to find out what their current market rate is.
It's worth noting, however, that while gold prices have fallen recently the cost of producing gold is on the rise. Although gold's price has fallen, its production costs have not.
When deciding whether to buy gold, another thing to consider is how much gold you intend on buying. It is sensible to avoid buying gold if you are only looking to cover the wedding rings. If you plan to do so as long-term investments, it is worth looking into. Profitable gold can be sold at a lower price than it was when you bought it.
We hope that this article has helped you gain a better understanding and appreciation for gold as an investment option. It is important to research all options before you make any decision. Only then can informed decisions be made.
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By: Kevin Helms
Title: The Long-Term Impact of Spot Bitcoin ETFs: A Comparison to Gold
Sourced From: news.bitcoin.com/vaneck-director-people-tend-to-underestimate-long-term-impact-of-spot-bitcoin-etfs/
Published Date: Tue, 02 Jan 2024 03:30:47 +0000
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