The demand for US spot Bitcoin ETFs surged significantly on Tuesday, outpacing the new supply created daily by miners by a remarkable 614%, according to Gayatri Choudry, Quantitative Research Analyst at Bitwise Asset Management.
Growing Interest in Bitcoin ETFs
The surge in demand for Bitcoin ETFs reflects growing interest among institutional and retail investors in gaining exposure to the digital asset, without having to manage the BTC themselves. ETFs offer a convenient and regulated way for investors to participate in the potential upside of Bitcoin's price movements while mitigating some of the risks associated with direct ownership and custody.
Impact of Bitcoin Halving
The Bitcoin halving, scheduled to occur in less than a month, will reduce the block reward from 6.25 BTC to 3.125 BTC. This event is significant because it reduces the rate at which new bitcoin is generated by half, making BTC more scarce over time. As demand for Bitcoin ETFs continues to rise and outpace new supply, the available bitcoin on the market is becoming drastically scarce.
Catalysts for Bitcoin Price Surge
The combination of rising demand for Bitcoin ETFs and the impending Bitcoin halving have been the catalysts for the surge in Bitcoin's price this year, with BTC now up over 55% year-to-date at the time of writing. Since BlackRock initially filed its spot Bitcoin ETF application with the US Securities and Exchange Commission, BTC has risen over 173%.
Anticipation for Market Reaction
Market participants remain eager to see how Bitcoin will react to the upcoming halving, as this is the first market cycle in Bitcoin's history where its price reached a new all-time high before the halving. Historically, it would take a few months for the 'supply shock' to jump start a rise in Bitcoin's price following a halving. But now, with demand from spot Bitcoin ETFs growing with no end in sight, Bitcoin has already experienced a big supply shock, and the new supply of BTC per day is about to get cut in half.
Frequently Asked Questions
Can I keep a Gold ETF in a Roth IRA
You may not have this option with a 401(k), however, you might want to consider other options, like an Individual retirement account (IRA).
A traditional IRA allows for contributions from both employer and employee. A Employee Stock Ownership Plan, or ESOP, is another way to invest publicly traded companies.
An ESOP can provide tax advantages, as employees are allowed to share in company stock and the profits generated by the business. The money invested in ESOPs is taxed at a lower rate that if it were owned directly by an employee.
An Individual Retirement Annuity (IRA) is also available. An IRA lets you make regular, income-generating payments to yourself over your life. Contributions to IRAs can be made without tax.
Can I purchase gold with my self directed IRA?
Although you can buy gold using your self-directed IRA account, you will need to open an account at a brokerage like TD Ameritrade. You can also transfer funds from another retirement account if you already have 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 can contribute up to $1,000 annually ($2,000 if married and filing jointly) directly to a Roth IRA.
You might want to purchase physical bullion, rather than futures contracts if you are going to invest in gold. 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. You can only hold physical bullion, which is real silver and gold bars.
Who owns the gold in a Gold IRA?
The IRS considers gold owned by an individual to be “a type of money” and is subject taxation.
You must have gold at least $10,000 and it must be stored for at the least five years in order to take advantage of this tax-free status.
Although gold can help to prevent inflation and price volatility, it’s not sensible to have it if it’s not going to be used.
If you plan on selling the gold someday, you’ll need to report its value, which could affect how much capital gains taxes you owe when you cash in your investments.
It is a good idea to consult an accountant or financial planner to learn more about your options.
Should you open a Precious Metal IRA
You should be aware that precious metals cannot be covered by insurance. There are no ways to recover the money you lost in an investment. This includes losing all your investments due to theft, fire, flood, etc.
Protect yourself against this type of loss by investing in physical gold or silver coins. These items have been around for thousands of years and represent real value that cannot be lost. They are likely to fetch more today than the price you paid for them in their original form.
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.
Remember that you will not see any returns unless you are retired if you open an Account. Don’t forget the future!
How much do gold IRA fees cost?
An Individual Retirement Account (IRA) fee is $6 per month. This fee covers account maintenance fees, as well any investment costs that may be associated with your investments.
To diversify your portfolio you might need to pay additional charges. These fees can vary depending on which type of IRA account you choose. Some companies offer checking accounts for free, while others charge monthly fees for IRA account.
In addition, most providers charge annual management fees. These fees can range from 0% up to 1%. The average rate for a year is.25%. These rates can be waived if the broker is TD Ameritrade.
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)
- 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)
- 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)
- 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
forbes.com
law.cornell.edu
- 7 U.S. Code SS7 – Designation board of trade as contract marketplaces
- 26 U.S. Code SS 408 – Individual retirement plans
investopedia.com
- Do You Need a Gold IRA to Get Retirement?
- What are the Options Types, Spreads. Example. And Risk Metrics
bbb.org
How To
How to keep physical gold in an IRA
The easiest way to invest is to buy shares in companies that make gold. But this investment method has many risks as there is no guarantee of survival. If they survive, there’s still the risk of losing money due to fluctuations in the price of gold.
The alternative is to buy physical gold. You can either open an account with a bank, online bullion dealer, or buy gold directly from a seller you trust. This option offers the advantages of being able to purchase gold at low prices and easy access (you don’t need to deal directly with stock exchanges). It’s also easier to see how much gold you’ve got stored. So you can see exactly what you have paid and if you missed any taxes, you will get a receipt. There’s also less chance of theft than investing in stocks.
However, there are some disadvantages too. You won’t get the bank’s interest rates or investment money. You won’t have the ability to diversify your holdings; you will be stuck with what you purchased. Finally, the tax man might ask questions about where you’ve put your gold!
BullionVault.com has more information about how to buy gold in an IRA.
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By: Nik Hoffman
Title: The Surge in Demand for Bitcoin ETFs Amid Impending Halving
Sourced From: bitcoinmagazine.com/markets/bitcoin-etf-demand-surges-outpacing-supply-by-600
Published Date: Wed, 27 Mar 2024 18:49:09 GMT
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