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Introduction
The Bitcoin Volatility Premium AMC, an innovative investment product, has quickly become the largest actively managed bitcoin-only financial product in Europe and the second largest globally. Despite this achievement, to date this bitcoin-only AMC has flown under the radar and has received no media coverage to date until now. What makes this investment product offering particularly interesting is its dramatic rise was due to the seed investment of $50 million to launch from an enigmatic early Bitcoin miner from 2010. The product is designed to curb Bitcoin's volatile pricing, fostering its adoption as a reliable medium of exchange.
What is an AMC?
AMC stands for Actively Managed Certificate. It is a type of structured security that is popular in Europe. Jurisdictions such as Luxembourg and Jersey allow asset managers to create these certificates in order to raise capital from investors. Certificates provide a "wrapper" for an investment strategy, or specific underlying assets. The certificate is sold to investors and the capital is used to implement the strategy.
Who is the Mysterious Whale?
In response to inquiries about the identity of the Bitcoin Whale behind the new Bitcoin Volatility Premium AMC, Zeltner & Co. confirmed that the seed investor is indeed an early Bitcoin miner who has been involved in Bitcoin since 2010. However, respecting the investor's request to preserve privacy and avoid public scrutiny, Zeltner & Co. declined to reveal any further details about their identity. The motives behind such a significant move by an individual with substantial Bitcoin holdings are particularly intriguing. The creation of this AMC, aimed at stabilizing Bitcoin's price, showcases a strategic approach to managing digital assets. By personally allocating their holdings to develop this investment product, the Bitcoin Whale not only addresses the issue of Bitcoin’s volatility but also enhances its viability as a stable medium of exchange. This AMC stands out as a unique market-making instrument that not only seeks to manage risk but also differentiates itself through its operational approach, targeting a more stable and predictable market for Bitcoin.
Why is this AMC Relevant?
The Bitcoin Volatility Premium AMC has already become the largest actively managed bitcoin-only financial product in Europe and the second largest globally after the Purpose Investments Bitcoin Yield ETF (BTCY), with over $109 million CAD ($80.750 U.S.). There are several large Bitcoin ETFs that actively manage futures positions, such as the ProShares Bitcoin Strategy ETF (BITO), with over $2.82 billion in assets under management; however, these are not actively managed funds in the traditional sense. Instead of trying to outperform or optimize the risk/return of a direct investment in bitcoin, futures ETFs aim to track the price of bitcoin 1:1.
How is its Investment Strategy Unique?
The certificate invests algorithmically in bitcoin and U.S. dollars, aiming to collect a volatility premium while optimizing the risk-return profile directly by investing in bitcoin. The strategy provides liquidity to the BTC/USD spot market with market making on leading exchanges such as Kraken. This leads to small gains, which can accumulate between 2% and 6% per annum, depending on volatility. The volatility premium is generated when the market moves from filling the buy orders generated by the algorithm to filling the sell orders, and vice versa. The algorithm buys low and sells high at each dip or peak, respectively.
Market Impact and Future Prospects
The goal of the Bitcoin Volatility Premium AMC is to mitigate the price fluctuations of Bitcoin, making it more stable and functional as a medium of exchange. Dr. Demelza Hays, a portfolio manager at Zeltner & Co., shared insights with Bitcoin Magazine Pro: "Bitcoin's potential to become a global medium of exchange and money hinges significantly on achieving stable purchasing power. Currently, the volatility inherent in Bitcoin's price poses a barrier to its widespread adoption for everyday transactions. However, if Bitcoin were to stabilize in value, it could emerge as a viable alternative to traditional fiat currencies, offering benefits such as decentralization, security, and lower transaction costs on Bitcoin scaling solutions such as Liquid, AQUA, and the Lightning Network."
Swiss Family Office Involvement
The strategy is managed by the prestigious family office Zeltner & Co., based in Zurich, Switzerland. Founded by Thomas Zeltner, Zeltner & Co. is continuing the legacy of Thomas’s father, the late former president of UBS' wealth management, Jürg Zeltner. Zeltner & Co., renowned for its discretion and expertise in wealth management, has lent credibility to this venture, solidifying confidence in the strategy's legitimacy and potential for success.
Regulatory and Geographic Advantage
Choosing Zurich, Switzerland for its headquarters, the AMC benefits from the region's favorable regulatory environment and its reputation as a global finance and innovation hub. This strategic location enhances the security and appeal of the Bitcoin Volatility Premium AMC to investors seeking to diversify into digital assets.
Conclusion
The launch of the Bitcoin Volatility Premium AMC comes at a time of heightened interest, with bitcoin recently surpassing all-time highs and capturing the attention of institutional investors and mainstream media alike. As the market continues to mature and attract greater institutional participation, the emergence of innovative investment vehicles such as this certificate highlights the evolving nature of digital asset management.
Frequently Asked Questions
Can the government seize your gold?
Because you have it, the government can't take it. It is yours because you worked hard for it. It belongs to you. This rule could be broken by exceptions. You could lose your gold if convicted of fraud against a federal government agency. You can also lose precious metals if you owe taxes. However, even if taxes are not paid, gold is still your property.
Is it possible to hold a gold ETF within a Roth IRA
Although a 401k plan might not provide this option, you should still consider other options like an Individual Retirement Account (IRA).
An IRA traditional allows both employees and employers to contribute. Another way to invest in publicly traded companies is through an Employee Stock Ownership Plan.
An ESOP gives employees tax advantages as they share the stock of the company and the profits it makes. The money invested in ESOPs is taxed at a lower rate that if it were owned directly by an employee.
Also available is an Individual Retirement Annuity. With an IRA, you make regular payments to yourself throughout your lifetime and receive income during retirement. Contributions to IRAs can be made without tax.
What is a Precious Metal IRA (IRA)?
You can diversify your retirement savings by investing in precious metal IRAs. This allows you to invest in gold, silver and platinum as well as iridium, osmium and other rare metals. These metals are known as “precious” because they are rare and extremely valuable. These are good investments for your cash and will help you protect yourself from economic instability and inflation.
Precious metals often refer to themselves as “bullion.” Bullion is the physical metal.
You can buy bullion through various channels, including online retailers, large coin dealers, and some grocery stores.
An IRA for precious metals allows you to directly invest in bullion instead of purchasing stock shares. This will ensure that you receive annual dividends.
Precious Metal IRAs don’t require paperwork nor have annual fees. Instead, your gains are subject to a small tax. Additionally, you have access to your funds at no cost whenever you need them.
What are the pros & cons of a Gold IRA?
The main advantage of an Individual Retirement Account (IRA) over a regular savings account is that you don't have to pay taxes on any interest earned. This makes an IRA great for people who want to save money but don't want to pay tax on the interest they earn. However, there are disadvantages to this type investment.
For example, if you withdraw too much from your IRA once, you could lose all your accumulated funds. Also, the IRS may not allow you to make withdrawals from your IRA until you're 59 1/2 years old. If you do withdraw funds from your IRA you will most likely be required to pay a penalty.
Another disadvantage is that you must pay fees to manage your IRA. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management charges ranging anywhere from $10 to $50.
If you prefer your money to be kept out of a bank, then you will need insurance. Insurance companies will usually require that you have at least $500,000. It is possible that you will be required to purchase insurance that covers losses of up to $500,000.
You will need to decide how much gold you wish to use if you opt for a gold IRA. Some providers restrict the amount you can own in gold. Some providers allow you to choose your weight.
You will also have to decide whether to purchase futures or physical gold. The price of physical gold is higher than that of gold futures. However, futures contracts give you flexibility when buying gold. They enable you to establish a contract with an expiration date.
You'll also need to decide what kind of insurance coverage you want. Standard policies don't cover theft protection, loss due to fire, flood or earthquake. It does offer coverage for natural disasters. Additional coverage may be necessary if you reside in high-risk areas.
In addition to insurance, you'll need to consider the cost of storing your gold. Insurance won't cover storage costs. For safekeeping, banks typically charge $25-40 per month.
To open a IRA in gold, you will need to first speak with a qualified custodian. A custodian keeps track of your investments and ensures that you comply with federal regulations. Custodians can't sell assets. Instead, they must keep your assets for as long you request.
After you've determined which type of IRA is best for you, fill out the paperwork indicating your goals. The plan should contain information about the types of investments you wish to make such as stocks, bonds or mutual funds. The plan should also include information about how much you are willing to invest each month.
After filling in the forms, please send them to the provider. The company will review your application and send you a confirmation letter.
You should consult a financial planner before opening a Gold IRA. Financial planners are experts at investing and can help you determine which type of IRA is best for you. They can also help reduce your costs by suggesting cheaper options for purchasing insurance.
How much money should my Roth IRA be funded?
Roth IRAs let you save tax on retirement by allowing you to deposit your own money. The account cannot be withdrawn from until you are 59 1/2. If you decide to withdraw some of your contributions, you will need to follow certain rules. First, your principal (the deposit amount originally made) is not transferable. No matter how much money you contribute, you cannot take out more than was originally deposited to the account. If you are able to take out more that what you have initially contributed, you must pay taxes.
The second rule states that income taxes must be paid before you can withdraw earnings. You will pay income taxes when you withdraw your earnings. Consider, for instance, that you contribute $5,000 per year to your Roth IRA. Let's further assume you earn $10,000 annually after contributing. You would owe $3,500 in federal income taxes on the earnings. The remaining $6,500 is yours. The amount you can withdraw is limited to the original contribution.
The $4,000 you take out of your earnings would be subject to taxes. You'd still owe $1,500 in taxes. You'd also lose half the earnings that you took out, as they would be subject to a second 50% tax (half of 40%). Even though you had $7,000 in your Roth IRA account, you only received $4,000.
Two types of Roth IRAs are available: Roth and traditional. Traditional IRAs allow for pre-tax deductions from your taxable earnings. To withdraw your retirement contribution balance plus interest, your traditional IRA is available to you. You have the option to withdraw any amount from a traditional IRA.
Roth IRAs don't allow you deduct contributions. You can withdraw your entire contribution, plus accrued interests, after you retire. There is no minimum withdrawal required, unlike a traditional IRA. You don't need to wait until your 70 1/2 year old age before you can withdraw your contribution.
Who is the owner of the gold in a gold IRA
The IRS considers gold owned by an individual to be “a type of money” and is subject taxation.
To take advantage of this tax-free status, you must own at least $10,000 worth of gold and have been storing it for at least five years.
Owning gold can also help protect against inflation and price volatility, but it doesn't make sense to hold gold if you're not going to use it.
If you plan to sell the gold one day, you will need to report its worth. This will affect how much capital gains tax you owe on cash you have invested.
You should consult a financial planner or accountant to see what options are available to you.
How much of your IRA should include precious metals?
You should remember that precious metals are not only for the wealthy. They don't require you to be wealthy to invest in them. You can actually make money without spending a lot on gold or silver investments.
You may consider buying physical coins such as bullion bars or rounds. 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 can still get benefits from precious metals regardless of what choice you make. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
Their prices rise with time, which is a different to traditional investments. This means that if you decide on selling your investment later, you'll likely get more profit than you would with traditional investing.
Statistics
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.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 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)
- 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
irs.gov
finance.yahoo.com
law.cornell.edu
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement accounts
bbb.org
How To
The best way to buy gold (or silver) online
You must first understand the workings of gold before you can purchase it. The precious metal gold is similar to platinum. It is rare and used as money due to its durability and resistance against corrosion. It's difficult to use, so most people prefer purchasing jewelry made from it rather than actual bars.
There are two types of gold coins available today – one type is legal tender, while the other is called bullion. Legal tender coins can be used for circulation within a country. These coins usually come in denominations such $1, $5 and $10.
Bullion coins can only be used as investment currency. They increase in value due to inflation.
They can't be exchanged in currency exchange systems. For example, a person who buys $100 worth or gold gets 100 grams. This gold has a $100 price. Each dollar spent earns the buyer 1 gram gold.
The next thing you should know when looking to buy gold is where to do it from. There are a few options if you wish to buy gold directly from a dealer. First, go to your local coin shop. You could also look into eBay or other reputable websites. You can also look into buying gold online from private sellers.
Individuals selling gold at wholesale prices and retail prices are known as private sellers. Private sellers will charge you a 10% to 15% commission for every transaction. This means that you will get less back from a private seller than if you sell it through a coin shop or on eBay. This option is often a great one for investors in gold, as it gives you greater control over the item's value.
You can also invest in gold physical. Although physical gold is easier to store than paper certificates you will still need to ensure it is safe. Physical gold should be stored in an impenetrable container, such a vault and safety deposit box to ensure its safety.
When buying gold on your own, you can visit a bank or a pawnshop. A bank can provide you with a loan to cover the amount you wish to invest in gold. Customers can borrow money from pawnshops to purchase items. Banks charge higher interest rates than those offered by pawn shops.
A third way to buy gold? Simply ask someone else! Selling gold is also easy. It is easy to sell gold by contacting a company like GoldMoney.com. You can create a simple account immediately and begin receiving payments.
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