The Growing Demand for Bitcoin
Last week, I discussed the significant buying pressure on Bitcoin and the various sources of potential demand in the market. While Bitcoin ETFs, MicroStrategy's increased shares, Tether's constant buying, and the upcoming halving are expected to drive demand, there is another unexpected player entering the scene – China.
The Changing Economic Landscape in China
China has been undergoing a significant economic transition in recent years. The country's previous economic model relied heavily on debt and manufacturing goods for foreign customers. However, this era is coming to an end, as China faces a declining real estate market and stock market crash. These signs indicate a shift away from the previous paradigm.
China Asset Management's Actions
China Asset Management Company (China AMC), a major fund manager and ETF provider in China, recently halted trading on their Nasdaq 100 and S&P 500 ETFs to prevent further money outflow from other funds. This move resulted in a 21% premium over NAV for US-connected ETFs on Chinese markets. The flight to safety has also affected Chinese-based Japanese ETFs, with the China AMC's Nomura Nikkei 225 ETF experiencing a 6% rise to a 22% premium.
Chinese Investors Turning to Bitcoin
Chinese investors are currently in a state of panic, and the authorities are taking steps to restrict capital outflow. As a result, it is only a matter of time before more Chinese investors start turning to Bitcoin as a store of value and for its portability. While Bitcoin is officially banned in Mainland China, investors can still access it through exchanges like Binance and OKX, as well as through OTC trading and off-shore bank accounts. Hong Kong, which opened up to Bitcoin last year, is unlikely to reverse its stance on legalization, further supporting Bitcoin's potential as a safe haven asset.
A senior executive of a Hong Kong-based Bitcoin exchange confirmed the trend of capital flight, stating that mainland investors are increasingly looking to allocate assets offshore due to the risky and uncertain nature of the mainland investment market.
Bitcoin's Potential in the Current Economic Climate
Bitcoin's unique properties make it an attractive asset in a world of capital flight and negative growth. With Europe likely already in a recession and the faltering European markets, Bitcoin offers a parallel world of green shoots. As investors realize the limitations of the traditional financial system, Bitcoin's revolutionary technology, fixed supply, and potential for economic growth make it an appealing investment option.
Bitcoin Price Update
Bitcoin's price performance has been relatively steady since the ETF launch, despite the selling of GBTC and rotation into lower capital fees of the new ETFs. The RSI indicator, widely used by traders, suggests that significant upside in price may only come once the RSI hits oversold levels. However, with the current demand dynamics, a significant downside is also unlikely.
On the daily chart, the 100-day moving average (DMA) is providing support, and the $37,877 level is an important price level to watch. Any dip that pushes the RSI into oversold territory is not expected to close below that level. While the 100-day DMA typically does not provide significant support for Bitcoin, there is precedence from September 2020 when it played a crucial role before a major bull rally.
In conclusion, the growing demand for Bitcoin from ETFs and the capital flight from China are driving forces in the market. Despite the complexities of the ETF launch, Bitcoin's price has remained relatively steady. As demand becomes more apparent, we can expect to see further price movements in the future.
Frequently Asked Questions
What type of IRA are you using to buy precious metals stocks?
Most financial institutions and employers offer an Individual Retirement Account (IRA). This is an investment vehicle that most people can use. An IRA lets you contribute money that will grow tax-deferred to the time it is withdrawn.
You can save taxes and pay them later with an IRA. This allows you to save more money today and pay less taxes tomorrow.
An IRA has the advantage of allowing contributions and earnings to grow tax-free until you withdraw your funds. When you do, there are penalties for early withdrawal.
You can also contribute to your IRA beyond age 50 without penalty. If you take out of your IRA during retirement you will owe income and a 10% federal penal.
A 5% IRS penalty is applicable to withdrawals made before the age of 59 1/2. For withdrawals made between the age of 59 1/2 & 70 1/2, a 3.4% IRS penalty will apply.
Withdrawal amounts exceeding $10,000 per year are subject to a 6.2% IRS penalty.
Which is more powerful: sterling silver or 14k gold?
Although gold and silver can be strong metals, sterling silver is far less expensive as it contains 92% silver instead of 24%.
Sterling silver, also known as fine or sterling silver, is made of a combination of silver and other metals like copper and zinc.
Gold is usually considered to be extremely strong. It takes tremendous pressure to split it apart. If you dropped an object onto a piece or gold, it would break into thousands instead of two halves.
Silver isn't nearly as strong as either gold or silver. If you dropped an object onto a sheet silver, it would bend and fold with no damage.
Silver is often used in jewelry and coins. Its value fluctuates based on demand and supply.
What precious metal should I invest in?
Gold is an investment that offers high returns on its capital. It protects against inflation, as well as other risks. As people become worried about inflation, the value of gold tends rise.
It is a smart idea to buy gold futures. These contracts assure you that you will receive a specified amount of precious metal at a fixed price.
Gold futures are not for everyone. Some prefer physical gold.
They can easily trade their gold with others. They can also sell their gold whenever they wish.
Some people want to avoid paying tax on their gold. To do that, they buy gold directly from the government.
This process requires you to make several trips to your local post office. You will first need to convert any existing gold in coins or bars.
Then, you need to get a stamp on those coins or bars. Finally, send the coins or bars to the US Mint. There they will melt the coins or bars into new ones.
These new bars and coins have the original stamps stamped on them. They are therefore legal tender.
The US Mint will not tax gold purchased directly.
Decide which precious metal you would like to invest.
Can you make money on a gold IRA?
Two things are necessary if you want to make a profit on your investment. First, you need to understand the market. Second, you need to know what type of products you have.
Trading should not be started if you don’t have sufficient information.
Also, you should find the broker that provides the best service possible for your account type.
There are many accounts available, including Roth IRAs and standard IRAs.
If you have other investments such as bonds or stocks, you might also consider a rollover.
Statistics
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that 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)
- You can only purchase gold bars of at least 99.5% purity. (forbes.com)
- The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (monex.com)
- Silver must be 99.9% pure • (forbes.com)
External Links
wsj.com
investopedia.com
forbes.com
- Gold IRA, Add Some Sparkle to Your Retirement Nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
en.wikipedia.org
How To
Things to Remember about the Best Precious Metals Ira of 2022
Precious Metals Ira ranks high among investors as one of their most popular investment options. This article will explain what makes precious metals Ira so appealing and how you can make smart decisions when investing in them.
These assets are renowned for their long-term potential growth. If we look at historical data, gold prices show incredible returns. In the last 200 years, gold prices have risen from $20 to $1900 an ounce over the past 200. In comparison, the S&P 500 Index only grew by around 50%.
When economic uncertainty is high, gold can be considered a reliable financial asset. People tend to sell stocks when the stock market is in trouble and shift into gold for safety. Also, gold is considered a hedge against inflation. Many economists believe there will always be inflation. They believe that physical gold can be used to protect your savings against future price rises.
Before you buy any precious metal, such as silver, gold, palladium or platinum, there are some things you should consider. You must first decide whether you wish to invest in bullion coins or bars. Bullion bars are often purchased in large quantities (like 100 grams) and stored until needed. Bullion bars are often replaced by coins, which can be used to buy smaller amounts of bullion.
Second, consider where you want to store your precious materials. Some countries are safer then others. If you are in the US, it might be a good idea to store your precious metals abroad. If you are thinking of storing your precious metals in Switzerland, however, you might be wondering why.
Finally, decide whether you want investment in precious metals directly (or through precious metals exchange traded funds) (ETFs). ETFs, which track the performance different commodities like gold, are financial instruments. These are a way to have exposure to precious metals but not necessarily own them.
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