The Decrease in Bitcoin Holdings on Exchanges
Over the past 90 days, approximately 60,000 bitcoins, valued at just over $2 billion, have been withdrawn from various trading platforms. This withdrawal has significantly impacted the liquidity in the market, according to a recent report from Falconx. Currently, the number of bitcoins held on centralized exchanges is slightly more than 2 million, which is a multi-year low.
The Exodus of Bitcoins from Exchanges
The count of bitcoins on centralized exchanges has drastically decreased in recent times. As of November 5, 2022, there were 2.513 million BTC stashed on trading platforms. However, this number has now fallen to a mere 36,000 BTC, indicating a reduction of 477,000 BTC within a span of under a year. This withdrawal of bitcoins from exchanges has resulted in a significant loss of liquidity, with a total of $2 billion worth of bitcoins being removed from these platforms.
The Decrease in Ethereum and Stablecoins on Exchanges
Similar to bitcoins, the number of ethereum (ETH) kept on centralized exchanges has also decreased. On November 5, 2022, there were 23.14 million ETH held on trading platforms. However, as of October 30, 2023, this count has fallen to 14.57 million, indicating a withdrawal of 8.57 million ethereum worth $15.64 billion in less than a year.
In addition to ethereum, stablecoins have also been taken off exchanges or redeemed by the central issuers. Exchanges that held $35 billion in stablecoin assets last November now only have $17.34 billion. This indicates that more than $17 billion in ERC20-based stablecoins were either redeemed or removed.
The Impact of Liquidity on the Crypto Market
The decrease in crypto assets held on exchanges has led to a lack of liquidity in the market. This lack of liquidity is believed to be one of the factors contributing to the recent volatility in the cryptocurrency market. A recent report from Falconx, citing Coin Metrics data, states that the crypto market's depth in 2023 has reached its lowest point. With bitcoin's halving approaching, these liquidity cycles may become even more significant.
What are your thoughts on the decreasing amount of crypto assets held on exchanges over the last 90 days and year? Share your opinions and insights about this subject in the comments section below.
Frequently Asked Questions
How Much of Your IRA Should Be Made Up Of Precious Metals
You should remember that precious metals are not only for the wealthy. It doesn't matter how rich you are to invest in precious metals. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. Shares in precious metals-producing companies could be an option. Or, you might want to take advantage of an IRA rollover program offered by your retirement plan provider.
You will still reap the benefits of owning precious metals, regardless of which option you choose. Although they aren’t stocks, they offer the possibility for long-term gains.
They also tend to appreciate over time, unlike traditional investments. If you decide to sell your investment, you will likely make more than with traditional investments.
How to Open a Precious Metal IRA?
The first step is to decide if you want an Individual Retirement Account (IRA). If you do, you must open the account by completing Form 8606. You will then need to complete Form 5204 in order to determine which type IRA you are eligible. You must complete this form within 60 days of opening your account. You can then start investing once you have this completed. You can also contribute directly to your paycheck via payroll deduction.
To get a Roth IRA, complete Form 8903. Otherwise, the process will look identical to an existing IRA.
To be eligible to have a precious metals IRA you must meet certain criteria. The IRS requires that you are at least 18 years old and have earned an 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 on a regular basis. These rules apply regardless of whether you are contributing directly to your paychecks or through your employer.
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. This means you won't be allowed to trade shares of stock 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 are not as liquid or as easy to sell as stocks and bonds. This makes them harder to sell when needed. Second, they don’t produce dividends like stocks or bonds. So, you'll lose money over time rather than gain it.
How is gold taxed within an IRA?
The fair market price of gold when it is sold determines the tax due on its sale. You don't pay taxes when you buy gold. It is not income. If you decide to sell it later, there will be a taxable gain if its price rises.
As collateral for loans, gold is possible. When you borrow against your assets, lenders try to find the highest return possible. This often means selling gold. This is not always possible. They may keep it. They might decide that they want to resell it. The bottom line is that you could lose potential profit in any case.
You should not lend against your gold if it is intended to be used as collateral. Otherwise, it's better to leave it alone.
Should you open a Precious Metal IRA
Before opening an IRA, it is important to understand that precious metals aren't covered by insurance. There are no ways to recover the money you lost in an investment. This includes all investments that are lost to theft, fire, flood, or other causes.
This type of loss can be avoided by investing in physical silver and gold coins. These items can be lost because they have real value and have been around for thousands years. If you were to sell them today, you would likely receive more than what you paid for them when they were first minted.
When opening an IRA account, make sure you choose a reputable company offering competitive rates and high-quality products. Consider using a third-party custody company to keep your assets safe and allow you to access them at any time.
When you open an account, keep in mind that you won't receive any returns until your retirement. Don't forget the future!
What is a gold IRA account?
Gold Ira accounts are tax-free investment vehicles for people who want to invest in precious metals.
You can buy physical gold bullion coins at any time. You don’t have to wait to begin investing in gold.
The beauty of owning gold as an IRA is you can hold on to it forever. Your gold holdings will not be subject to tax when you are gone.
Your heirs inherit your gold without paying capital gains taxes. Your gold is not part of your estate and you don't have to include it in the final estate report.
You'll first have to set up an individual retirement account (IRA) to open a gold IRA. Once you've done so, you'll be given an IRA custodian. This company acts like a middleman between the IRS and you.
Your gold IRA custodian can handle all paperwork and submit necessary forms to IRS. This includes filing annual reports.
Once your gold IRA is established, you can purchase gold bullion coins. The minimum deposit is $1,000. A higher interest rate will be offered if you invest more.
You will pay taxes when you withdraw your gold from your IRA. If you take out the whole amount, you'll be subject to income taxes as well as a 10 percent penalty.
If you only take out a very small percentage of your income, you may not need to pay tax. There are exceptions. There are some exceptions. For instance, if you take out 30% or more from your total IRA assets, federal income taxes will apply plus a 20 percent penalty.
You shouldn't take out more then 50% of your total IRA assets annually. Otherwise, you'll face steep financial consequences.
- 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)
- 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)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- How do you keep your IRA Gold at Home? It's not exactly legal – WSJ
Guidelines for Gold Roth IRA
It is best to start saving early for retirement. Start saving as soon and as often as you're eligible (usually around 50 years old) and keep going until retirement. It's vital to contribute enough money each year to ensure adequate growth on an ongoing basis.
You may also wish to take advantage of tax-free investments such as a SIMPLE IRA, SEP IRA, and traditional 401(k). These savings vehicles permit you to make contributions, but not pay any tax until your earnings are withdrawn. This makes them great options for people who don't have access to employer matching funds.
The key is to save regularly and consistently over time. If you aren't contributing the maximum amount permitted, you could miss out on tax benefits.
By: Jamie Redman
Title: Crypto Exchanges Face Historic Liquidity Crunch Ahead of Bitcoin Halving
Sourced From: news.bitcoin.com/crypto-exchanges-face-historic-liquidity-crunch-ahead-of-bitcoin-halving/
Published Date: Mon, 30 Oct 2023 18:30:51 +0000