JPMorgan, a leading global investment bank, has raised concerns about the potential negative impact on bitcoin prices if the U.S. Securities and Exchange Commission (SEC) approves spot bitcoin exchange-traded funds (ETFs). The bank's analysts believe that the conversion of Grayscale Investments' bitcoin trust (GBTC) into a spot bitcoin ETF could result in billions of dollars exiting the cryptocurrency market.
The Market Impact of Spot Bitcoin ETFs
Nikolaos Panigirtzoglou, an analyst at JPMorgan, recently shared his insights on the potential consequences of the SEC approving spot bitcoin ETFs in a post on Linkedin. While expressing confidence in the imminent approval of these ETFs, he also highlighted the discussions taking place with clients regarding the potential capital outflow from the Grayscale Bitcoin Trust (GBTC) during its transition into a bitcoin ETF.
Panigirtzoglou explained that many speculative investors have purchased GBTC shares at a significant discount to NAV (net asset value) in anticipation of its conversion to an ETF. Once GBTC is converted, these investors may choose to take profits, resulting in an outflow of approximately $2.7 billion from GBTC. He further stated:
If this $2.7 billion exits the bitcoin space entirely, it would undoubtedly exert severe downward pressure on bitcoin prices.
However, if a significant portion of the $2.7 billion shifts into other bitcoin instruments such as the newly created spot bitcoin ETFs after SEC approval, the negative market impact would be less significant. Nonetheless, the analyst believes that the risks for bitcoin prices remain skewed to the downside, as some of the $2.7 billion is likely to exit the bitcoin space completely.
Panigirtzoglou also cautioned that if GBTC's fee, currently at 200 basis points (bp), is not substantially reduced after the ETF conversion, a more substantial amount of money could leave GBTC. He suggested that the equilibrium fee should be around 50-80bp.
A Shift Towards Regulated Crypto Entities
In addition, Panigirtzoglou discussed the impact of the recent settlement between Binance and various U.S. government agencies on the crypto industry. He believes that this settlement reinforces the ongoing trend of shifting towards regulated crypto entities and instruments, which has been the objective of U.S. authorities since the collapse of FTX.
According to Panigirtzoglou, the shift towards regulated crypto entities and instruments is beneficial for the crypto ecosystem, as increased regulation will attract the interest of traditional market participants and investors.
The JPMorgan analyst also noted that the involvement of major traditional asset managers like Blackrock and Fidelity in the approval process of physical or spot bitcoin ETFs by the SEC aligns with this trend.
What are your thoughts on JPMorgan's analysis of the price impact of spot bitcoin ETFs? Share your opinions in the comments section below.
Frequently Asked Questions
What are the fees associated with an IRA for gold?
Six dollars per month is the fee for an Individual Retirement Account (IRA). This includes account maintenance fees and investment costs for 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 checking accounts for free, while others charge monthly fees for IRA account.
Many providers also charge annual management fees. These fees are usually between 0% and 1%. The average rate is.25% annually. These rates can often be waived if a broker, such as TD Ameritrade, is involved.
How much gold should your portfolio contain?
The amount of capital required will affect the amount you make. You can start small by investing $5k-10k. As you grow, you can move into an office and rent out desks. So you don't have all the hassle of paying rent. Rent is only paid per month.
Consider what type of business your company will be running. In my case, I am running a website creation company, so we charge clients around $1000-2000/month depending on what they order. If you are doing this type of thing, it is important to think about how much you can expect from each client.
You won't get a monthly paycheck if you work freelance. This is because freelancers are paid. So you might only get paid once every 6 months or so.
You need to determine what kind or income you want before you decide how much of it you will need.
I recommend starting with $1k-$2k of gold and growing from there.
What Precious Metals Can You Invest in for Retirement?
The best precious metal investments are gold and silver. They are both simple to purchase and sell, and they have been around for a long time. These are great options to diversify your portfolio.
Gold: Gold is one the oldest forms currency known to man. It is also extremely safe and stable. It's a great way to protect wealth in times of uncertainty.
Silver: Silver is a popular investment choice. It's a good choice for those who want to avoid volatility. Silver is more volatile than gold. It tends to rise rather than fall.
Platinium: Another form of precious metal is platinum, which is becoming more popular. It's like silver or gold in that it is durable and resistant to corrosion. It is however more expensive than its counterparts.
Rhodium: Rhodium can be used in catalytic convertors. It is also used to make jewelry. It is also quite affordable compared with other types of precious metals.
Palladium: Palladium has a similarity to platinum but is more rare. It's also much more affordable. For these reasons, it's become a favorite among investors looking to add precious metals to their portfolios.
Statistics
- 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)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.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
cftc.gov
bbb.org
investopedia.com
finance.yahoo.com
How To
Three Ways to Invest In Gold For Retirement
It's essential to understand how gold fits into your retirement plan. You can invest in gold through your 401(k), if you have one at work. You might also be interested to invest in gold outside the workplace. You could, for example, open a custodial bank account at Fidelity Investments if your IRA (Individual Retirement Account) is open. You might also consider purchasing precious metals directly from a trusted dealer if they are not already yours.
These are three easy rules to remember if you invest in gold.
- Buy Gold with Your Money – You don't need credit cards, or to borrow money to finance your investments. Instead, put cash into your accounts. This will help you to protect yourself against inflation while also preserving your purchasing power.
- Physical Gold Coins You Should Buy – Physical gold coins should be purchased over a paper certificate. It's easier to sell physical gold coins rather than certificates. Also, there are no storage fees associated with physical gold coins.
- Diversify Your Portfolio – Never put all of your eggs in one basket. This means that you should diversify your wealth by investing in different assets. This will reduce your risk and give you more flexibility in times of market volatility.
—————————————————————————————————————————————————————————————–
By: Kevin Helms
Title: JPMorgan: Approval of Spot Bitcoin ETFs Could Lead to Significant Drop in Bitcoin Prices
Sourced From: news.bitcoin.com/jpmorgan-spot-bitcoin-etfs-could-put-severe-downward-pressure-on-bitcoin-prices/
Published Date: Sun, 26 Nov 2023 02:30:10 +0000
Related posts:
Grayscale’s Bitcoin Trust GBTC: Market Sentiment Shifts and Implications for Investors
JPMorgan: US Crypto Regulations Unlikely to Ease Despite SEC Legal Defeats
JPMorgan CEO Jamie Dimon Tells Congress Crypto Tokens Like Bitcoin Are ‘Decentralized Ponzi Schemes’
Grayscale Investments Engages with SEC on Bitcoin ETF Application
