Bitcoin Magazine Pro summarizes the medium-term thesis of bitcoin and how to view the looming macro volatility after the September FOMC meeting.
Below is an excerpt taken from Bitcoin Magazine Pro's most recent edition. Subscribe now to be the first to get these insights and other analysis on-chain bitcoin markets straight to your email inbox.
Maximum Pain: Still Ahead Of Us
Pain is the word of today. This was the favorite word of Federal Reserve Chairman Jerome Powell during the September Federal Open Market Committee meeting. A simple economic announcement and the subsequent press conference set off a mild panic in the market, sending rates higher, volatility rising and equities selling down with bitcoin following. The S&P 500 Index fell below 3850 and bitcoin crashed to $18,100. The 2-year Treasury was at 4.1%.
Markets were not turned around by a 75 basis point increase, as the Fed's forecasts and Powell’s speech combined gave risk assets even more to worry about. Powell repeatedly reiterated that there would be more economic pain in the future (job losses, declines in housing markets, etc.). As a result, the inflation problem is being solved. He mentioned a lack inflation in their favorite "corePCE" measure (personal consumption expenditures), and reiterated his Jackson Holehawkish speech, noting they will not stop until the job's done.
It is now either do or die when it comes to risk assets. There are two options: an immediate rally this week, or a more gradual decline in valuations and prices.
As long-term bull-biased Bitcoin proponents, our thesis at Bitcoin Magazine Pro is that macroeconomic headwinds are driving the market. Given the volatility in global currencies and bond markets, we believe the panic moment has yet not arrived. While we are flexible and open to changing our stance, as market analysts, it is not impossible for us to see and report on what is happening. We'll get to this in a moment.
On-chain cyclical metrics are useful in assessing long-term value buying or selling opportunities, but we haven't highlighted them as much over the past few months because we feel they are less relevant to price action than current macro headwinds.
When looking at the history and bitcoin market cycles, one notices immediately the consistent fall in bitcoin prices below their realized price (the average cost basis of all bitcoins as per their last movement via on-chain). This is the case during bear markets. This has happened in previous cycles. However, it's not a rare event. It is a cycle that comes with time. For months, we have been emphasizing that this bear market could last longer than many expect, and that the duration is more painful than any percentage drawdown.
"As an average holder is underwater most marginal sellers have already started to sell their holdings. While further downside may be possible, the 'pain market participants feel it in the form a prolonged period spent underwater rather that rapidly declining prices which characterized the beginning of the bear market." When will the Bear Market End? July 11, 2022
The daily BTC/USD exchange rate is completely set at the margin. Given the growing macroeconomic headwinds marginal sellers will likely continue to dominate marginal buyers up until a significant change in liquidity conditions.
This zoomed-in view shows how the capitulation process transfers the coins into more powerful, and better-capitalized hands.
The realized price of Bitcoin is weighted to show that we are in bear territory, but there is still room for improvement.
The realized market cap, which tracks the growth in bitcoin's price over time, is a reassuring chart for those who see this as the right time to buy long-term undervalued bitcoin. The cost basis has dropped by a maximum 24.07% over the cycle highs, and it is currently at 12.71%. This chart is what most non-bitcoin investors are not able to see. Despite the volatility of the exchange rate, even in the "everything speculation" bubble that bitcoin is part of, the cost base of the network is always increasing or decreasing.
The cost base is at 12.71%.
Frequently Asked Questions
What is the tax on gold in an IRA
The fair market price of gold when it is sold determines the tax due on its sale. You don't have tax to pay when you buy or sell gold. It's not considered income. If you decide to sell it later, there will be a taxable gain if its price rises.
Gold can be used as collateral for loans. Lenders try to maximize the return on loans that you take against your assets. This often means selling gold. There's no guarantee that the lender will do this. They might just hold onto it. They might decide that they want to resell it. In either case, you risk losing potential profits.
In order to avoid losing your money, only lend against your precious metal if you plan to use it to secure other collateral. It is better to leave it alone.
How much should I contribute to my Roth IRA account?
Roth IRAs allow you to deposit your money tax-free. You cannot withdraw funds from these accounts until you reach 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. First, you can't touch your principal (the initial amount that was deposited). You cannot withdraw more than the original amount you contributed. You must pay taxes on the difference if you want to take out more than what you initially contributed.
The second rule states that income taxes must be paid before you can withdraw earnings. Also, taxes will be due on any earnings you take. Let's assume that you contribute $5,000 each year to your Roth IRA. Let's also say that you earn $10,000 per annum after contributing. This would mean that you would have to pay $3,500 in federal income tax. The remaining $6,500 is yours. This is the maximum amount you can withdraw because you are limited to what you initially contributed.
So, if you were to take out $4,000 of your earnings, you'd still owe taxes on the remaining $1,500. In addition, 50% of your earnings will be subject to tax again (half of 40%). So even though your Roth IRA ended up having $7,000, you only got $4,000.
There are two types of Roth IRAs: Traditional and Roth. Traditional IRAs allow you to deduct pretax contributions from your taxable income. Your traditional IRA allows you to withdraw your entire contribution plus any interest. You can withdraw as much as you want from a traditional IRA.
Roth IRAs are not allowed to allow you deductions for contributions. Once you are retired, however, you may withdraw all of your contributions plus accrued interest. 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.
What precious metals could you invest in to retire?
These precious metals are among the most attractive investments. They're both easy to buy and sell and have been around forever. Consider adding them to the list if you're looking to diversify and expand your portfolio.
Gold: The oldest form of currency known to man is gold. It is also extremely safe and stable. It is a good way for wealth preservation during uncertain times.
Silver: Investors have always loved silver. It's an ideal choice for those who prefer to avoid volatility. Silver, unlike gold, tends not to go down but up.
Platinium: Platinum is another form of precious metal that's becoming increasingly popular. Like gold and silver, it's very 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 as a jewelry material. And, it's relatively cheap compared to other types of precious metals.
Palladium – Palladium is an alternative to platinum that's more common but less scarce. It's also less expensive. It's a popular choice for investors who want to add precious metals into their portfolios.
- 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)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- (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)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- You want to keep gold in your IRA at home? It's Not Exactly Lawful – WSJ
The History of Gold as an Asset
Gold was a currency from ancient times until the early 20th century. It was universally accepted and loved for its beauty, durability, purity and divisibility. Due to its value, it was also internationally traded. There was no international standard for measuring gold at that time, so different weights and measures were used around the world. For example, one pound sterling in England equals 24 carats; one livre tournois equals 25 carats; one mark equals 28 carats; and so on.
In the 1860s, the United States began issuing American coins made up of 90% copper, 10% zinc, and 0.942 fine gold. This led to a decline in demand for foreign currencies, which caused their price to increase. The price of gold dropped because the United States began to mint large quantities of gold coins. The U.S. government needed to find a solution to their debt because there was too much money in circulation. They decided to return some of the gold they had left to Europe.
Since most European countries were not confident in the U.S. dollar they began accepting gold as payment. After World War I, however, many European countries started using paper money to replace gold. Since then, the price of gold has increased significantly. Even though gold's price fluctuates, it is still one of the most secure investments you could make.
By: Dylan LeClair And Sam Rule
Title: Is The Bottom In For The Bitcoin Price?
Sourced From: bitcoinmagazine.com/markets/is-the-bottom-in-for-the-bitcoin-price
Published Date: Sat, 24 Sep 2022 02:00:00 GMT