A Bullish Trajectory for Bitcoin and Crypto Assets
As 2024 approaches, Bitfinex market strategists express optimism for bitcoin and crypto assets, citing their resilience in the face of regulatory and reputational challenges. Despite the oscillation between bouts of greed and regulation, the crypto market is expected to witness an upward trajectory, with the possibility of doubling its market capitalization.
Bitcoin's Potential Market Cap and Market Highs
Bitfinex analysts eye the year 2024 with optimism, suggesting that the crypto economy's market cap could increase up to $3.2 trillion. The latest Bitfinex Alpha report points out a shift towards "extreme greed" in the crypto fear and greed index, indicating mid-bull market highs for bitcoin (BTC) and a vibrant market phase.
Institutional Investors' Rising Interest in Crypto Assets
Bitfinex researchers emphasize the rising interest of institutional investors in crypto assets, particularly bitcoin. The anticipated spot bitcoin ETFs act as a catalyst, potentially attracting capital into higher-risk crypto assets. Nevertheless, bitcoin is expected to retain its favored status among institutional portfolios, especially in the first half of 2024.
The MVRV Metric and Market Environment
The MVRV metric, which compares market value to realized value, suggests a market environment similar to the bullish recoveries of the mid-2010s. As 2024 is a halving year, miner profitability and behavior become even more crucial. A healthy market with ample growth room is indicated, with limited selling pressure from miners anticipated.
Bitcoin's Adoption Trajectory and Global Trend
Bitfinex's Alpha report highlights bitcoin's adoption trajectory in countries like El Salvador and Argentina. The focus on bitcoin infrastructure in El Salvador and the shift towards decentralized assets in Argentina signify a broader global adoption curve that is set to steepen in 2024.
Increasing Global Cryptocurrency Ownership
Based on Bitfinex's predictive analysis, there is an anticipation of a significant increase in global cryptocurrency ownership, potentially reaching between 850 and 950 million individuals. This surge reflects the growing acceptance and integration of crypto assets like BTC into mainstream economic activities.
A Macro Outlook for 2024
Bitfinex's report concludes that the broader macroeconomic outlook for 2024 suggests stabilizing wage growth and manageable inflation levels. Despite geopolitical tensions and economic variabilities, a moderated inflation rate and a more efficient global economy are expected to contribute to a generally stable market conducive to the growth of crypto assets.
What are your thoughts on Bitfinex's Alpha report? Share your opinions in the comments section below.
Frequently Asked Questions
How much tax is gold subject to in an IRA
The fair market value at the time of sale is what determines how much tax you pay on gold sales. You don't have tax to pay when you buy or sell 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. Lenders look for the highest return when you borrow against assets. This often means selling gold. There's no guarantee that the lender will do this. They might just hold onto it. Or they might decide to resell it themselves. You lose potential profits in either case.
In order to avoid losing your money, only lend against your precious metal if you plan to use it to secure other collateral. It's better to keep it alone.
How to Open a Precious Metal IRA
The first step is to decide if you want an Individual Retirement Account (IRA). Open the account by filling out Form 8606. To determine which type of IRA you qualify for, you will need to fill out Form 5204. You must complete this form within 60 days of opening your account. Once this is done, you can start investing. You can also contribute directly to your paycheck via payroll deduction.
Complete Form 8903 if your Roth IRA option is chosen. Otherwise, the process is identical to an ordinary IRA.
To be eligible to have a precious metals IRA you must meet certain criteria. The IRS stipulates that you must have earned income and be at least 18-years old. Your annual earnings cannot exceed $110,000 ($220,000 if you are married and file jointly) for any tax year. Contributions must be made on a regular basis. These rules will apply regardless of whether your contributions are made through an employer or directly out of your paychecks.
A precious metals IRA can be used to invest in palladium or platinum, gold, silver, palladium or rhodium. But, you'll only be able to purchase physical bullion. This means you won't be allowed to trade shares of stock or bonds.
There are two major drawbacks to investing via an IRA in precious metals. First, they aren't as liquid than stocks and bonds. It is therefore harder to sell them when required. Second, they are not able to generate dividends as stocks and bonds. Therefore, you will lose more money than you gain over time.
What are the advantages of a IRA with a gold component?
The benefits of a gold IRA are many. It can be used to diversify portfolios and is an investment vehicle. You can control how much money is deposited into each account as well as when it's withdrawn.
You also have the option to transfer funds from other retirement plans into a IRA. This is a great way to make a smooth transition if you want to retire earlier.
The best part is that you don't need special skills to invest in gold IRAs. These IRAs are available at all banks and brokerage houses. You don't have to worry about penalties or fees when withdrawing money.
But there are downsides. Gold has historically been volatile. So it's essential to understand why you're investing in gold. Do you want safety or growth? Is it for insurance purposes or a long-term strategy? Only when you are clear about the facts will you be able take an informed decision.
You might want to buy more gold if you intend to keep your gold IRA for a long time. One ounce won't be enough to meet all your needs. You may need several ounces, depending on what you intend to do with your precious gold.
You don’t necessarily need a lot if you’re looking to sell your gold. You can even get by with less than one ounce. You won't be capable of buying anything else with these funds.
- 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)
- 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)
- 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 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)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- Are you interested in keeping gold in your IRA at-home? It's Not Exactly Legal – WSJ
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement account
3 Ways To Invest in Gold For Retirement
It's essential to understand how gold fits into your retirement plan. You can invest in gold through your 401(k), if you have one at work. You might also consider investing in gold outside your workplace. If you have an IRA (Individual Retirement Account), a custodial account could be opened at Fidelity Investments. Or, if you don't already own any precious metals, you may want to consider buying them directly from a reputable dealer.
These are the three rules to follow if you decide to invest in gold.
- Buy Gold With Your Cash – Do not use credit cards to purchase gold. Instead, put cash into your accounts. This will help to keep your purchasing power high and protect you against inflation.
- Physical Gold Coins You Should Buy – Physical gold coins should be purchased over a paper certificate. Physical gold coins are easier to sell than certificates. There are no storage fees for physical gold coins.
- Diversify Your Portfolio – Never put all of your eggs in one basket. This is how you spread your wealth. You can invest in different assets. This reduces risk and allows you to be more flexible during market volatility.
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