Introduction
JPMorgan, a global investment bank, has warned that the approval of spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) could have a significant impact on bitcoin prices. The bank's analysts predict that the conversion of Grayscale Investments' bitcoin trust (GBTC) into a spot bitcoin ETF could lead to billions of dollars exiting the crypto market.
Market Impact of Spot Bitcoin ETFs
JPMorgan analyst Nikolaos Panigirtzoglou recently shared his predictions regarding the potential impact on bitcoin prices if the SEC approves spot bitcoin ETFs. While expressing confidence in the approval, he highlighted concerns about the capital outflow from GBTC as it transitions into an ETF.
According to Panigirtzoglou, many speculative investors have purchased GBTC shares in the secondary market at discounted prices, anticipating its conversion into an ETF. These investors are likely to take profits once the conversion takes place, resulting in an estimated $2.7 billion exiting GBTC. This outflow could exert severe downward pressure on bitcoin prices.
However, Panigirtzoglou also suggests that if most of this $2.7 billion moves into other bitcoin instruments, such as newly created spot bitcoin ETFs post-SEC approval, the negative market impact would be less significant. Nevertheless, he believes that the risks for bitcoin prices are skewed to the downside, as a portion of the $2.7 billion is expected to leave the bitcoin space entirely.
The analyst also notes that if GBTC's fee, currently at 200 basis points (bp), is not substantially reduced post-ETF conversion, more than $2.7 billion could exit the trust. He recommends lowering the fee to an estimated range of 50-80 bp to prevent a larger outflow.
A Shift Towards Regulated Crypto Entities
Panigirtzoglou also discusses the impact of the recent Binance settlement with U.S. authorities on the crypto industry. He believes that this settlement reinforces the ongoing trend of shifting towards regulated crypto entities and instruments. U.S. authorities have been actively pursuing this objective since the collapse of FTX.
According to the analyst, this shift towards regulation is positive for the crypto ecosystem. Increased regulation is likely to attract the interest of traditional market participants and investors. Panigirtzoglou highlights the participation of major asset managers like Blackrock and Fidelity in the forthcoming approval of physical or spot bitcoin ETFs by the SEC as evidence of this trend.
Conclusion
JPMorgan's analysis suggests that the approval of spot bitcoin ETFs could have a significant impact on bitcoin prices. The conversion of GBTC into an ETF could result in billions of dollars exiting the crypto market, putting downward pressure on prices. However, if these funds move into other bitcoin instruments, the negative impact would be less severe. Additionally, the Binance settlement and the shift towards regulated crypto entities are seen as positive developments for the industry. Increased regulation is expected to attract traditional market participants and investors.
What are your thoughts on JPMorgan's analysis? Share your opinions in the comments section below.
Frequently Asked Questions
Can I store my gold IRA account at home?
An online brokerage account is the best option to protect your investment funds. Online brokerage accounts offer all the same investment options and you do not need any special licenses. You won't pay fees to invest.
Many online brokers also offer tools that can help you manage your portfolio. You can even download charts to view the performance of your investments.
Is it possible to make money with a gold IRA.
You must first understand the market and then know which products are available to make money.
You shouldn't trade if you don't have the right information.
It is important to find a broker who provides the best services for your account type.
You can choose from a variety of accounts, including Roth IRAs or standard IRAs.
A rollover may be an option if you have other investments like stocks or bonds.
Can I have gold in my IRA.
The answer is yes! You can add gold into your retirement plan. Gold is an excellent investment because it doesn't lose value over time. It is also immune to inflation. It also protects against inflation.
Before you decide to invest in gold, it is important to understand that it isn't like other investments. You cannot buy shares of companies that are gold, like stocks and bonds. These shares can also be not sold.
You must instead convert your gold into cash. This means you will need to get rid. You can't just hold onto it.
This makes gold an attractive investment. As with other investments you can always make a profit and sell them later. With gold, this isn't true.
Even worse, gold cannot be used to secure loans. For example, if a mortgage is taken out, you may have to sell some of your gold in order for the loan to be paid.
What does this translate to? Your gold can't be kept forever. You'll have to turn it into cash at some point.
But there's no reason to worry about that now. All you need to do is create an IRA. After that, you can start investing in gold.
Which is stronger? 14k Gold or Sterling Silver?
While gold and silver are both strong metals but sterling silver is less expensive than silver because it contains 92% pure Silver rather than 24%.
Sterling silver is also called fine silver. It is made from a combination silver and other metals, such as zinc and copper.
Gold is considered very strong. It is very difficult to separate it from its metal counterpart. If you dropped an object on top to a gold piece, it would shatter into thousands rather than breaking into two halves.
Silver isn't nearly as strong as either gold or silver. If you dropped an item onto a sheet of silver, it would probably bend and fold without shattering.
Silver is used in jewelry and coins. The price of silver can fluctuate according to supply and demande.
What are the three types of IRAs?
There are three basic types for IRAs. There are three types of IRAs: Roth, Traditional, and SEP. Each has its own advantages and disadvantages. Each one will be discussed below.
Traditional Individual Retirement Account (IRA)
A traditional IRA allows you contribute pretax money to an account which can be used to defer taxes and earn interest. Withdrawals from this account are exempted from tax once you have retired.
Roth IRA
Roth IRAs allow after-tax dollars to go into an account. Earnings are exempt from tax. If you withdraw funds for retirement, your withdrawals from the account are exempted of tax.
SEP IRA
This is similar to a Roth IRA, except that it requires employees to make additional contributions. These additional contributions are taxed, but any earnings grow tax-deferred once again. When you leave your company, you may convert the entire amount into a Roth IRA.
Which type of IRA can be used to store precious metals?
A Individual Retirement Account (IRA), is an investment vehicle offered by most financial institutions and employers. A IRA is a way to make money and allow it to grow tax-deferred, until you withdraw it.
You can save taxes by setting up an IRA and then paying them off when you retire. This allows you to save more money today and pay less taxes tomorrow.
An IRA's beauty is that earnings and contributions grow tax-free up to the time you withdraw them. There are penalties for early withdrawal if you do.
Additional contributions can be made to your IRA even after you turn 50, without any penalty. If you decide to withdraw your IRA from retirement, you will owe income taxes as well as a 10% federal penalty.
Withdrawals that are made prior to the age of 60 1/2 are subjected to a 5% IRS tax penalty. There is a 3.4% penalty for withdrawals between the ages 70 1/2 and 59 1/2.
Withdrawal amounts exceeding $10,000 per year are subject to a 6.2% IRS penalty.
Statistics
- 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)
- Same tax rules as traditional IRA SEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less Before setting up a Silver IRA, understand the fees and IRS restrictions. (sltrib.com)
- The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (forbes.com)
- Silver must be 99.9% pure • (forbes.com)
External Links
regalassets.com
takemetothesite.com
en.wikipedia.org
wsj.com
How To
Precious Metals that have been approved by the IRA
IRA-approved precious metallics are great investments, whether you want to save for retirement and invest in your next venture. Various options can help diversify your portfolio and protect against inflation from gold bars to silver coins.
There are two types of precious metal investment products. Because they are tangible, physical bullion products like bars and coins can be considered assets. On the other hand, exchange-traded funds (ETFs) are financial instruments that track the price movements of an underlying asset, such as gold. ETFs can be purchased directly from the company issuing them, and trade in the same way as stocks on stock exchanges.
There are many types of precious metals that you can purchase. Silver and gold are commonly used for jewellery making and decoration. However, platinum and palladium tend to be associated with luxury goods. Palladium tends to hold its value better than platinum, which makes it ideal for industrial uses. Although silver is useful for industrial purposes it is preferred for decorative uses.
Due to the high cost of refining and mining raw materials, physical bullion products are more expensive. But they are generally safer than traditional paper currencies and provide buyers with more security. One example is that consumers could lose trust in the currency, and may look for other currencies if the U.S. Dollar loses its purchasing power. Contrary to this, physical bullion does not rely on trust among countries or between companies. They are backed instead by central banks or governments, providing customers with peace of mind.
Demand and supply affect gold prices. When demand increases, the price rises; conversely, when supply exceeds demand, the price drops. This dynamic creates opportunities for investors to profit from fluctuations in the price of gold. Because they are able to receive higher returns on their investments, physical bullion product owners benefit from fluctuations in the price of gold.
Precious metals are not affected by interest rate changes or economic recessions, unlike traditional investments. As long demand is strong, gold prices will continue to climb. This is why precious metals are considered safe havens when times are uncertain.
The most popular precious metals include:
- Gold – This is the oldest kind of precious metal. It is often called “yellow gold”. Gold is a common name, but it's a rare element that can be found underground. Most of the gold reserves in the world are located in South Africa.
- Silver – After gold, silver ranks second in precious metals. Silver is also mined from natural resources, just like gold. Silver is extracted from ore, not rock formations, unlike gold. Because of its malleability and durability, as well resistance to tarnishing and conductivity, silver is widely used by industry and commerce. The United States produces over 98% of all global silver production.
- Platinum – Platinum is the third-most valuable precious metal. It can be used in many industrial applications, including fuel cells, catalysts, and high-end medical devices. Dental crowns, bridges, and fillings can also be made from platinum.
- Palladium: Palladium is the 4th most valuable precious metallic. Because of its strength as well as stability, its popularity is increasing rapidly among manufacturers. Palladium is also used for electronics, aerospace, military technology and automobiles.
- Rhodium – Rhodium is the fifth most valuable precious metal. Rhodium is a rare metal, but it is highly sought-after because of its use as a catalyst for automobile engines.
- Ruthenium-Ruthenium is the sixth-most valuable precious metal. While there are only limited supplies of platinum and palladium, ruthenium is plentiful. It is used for steel manufacturing, chemical manufacturing, and aircraft engines.
- Iridium – Iridium is the seventh-most valuable precious metal. Iridium has a significant role in satellite technology. It is used to construct orbiting satellites that transmit television signals, telephone calls, and other communications.
- Osmium – Osmium is the eighth most valuable precious metal. Osmium is commonly used in nuclear reactors because of its ability to withstand extreme temperatures. It is also used in cutting tools, jewelry, and medicine.
- Rhenium- Rhenium, the ninth most precious precious metal, is Rhenium. Rhenium is used to refining oil and natural gas, in semiconductors, and rocketry.
- Iodine – Iodine is the tenth most valuable precious metal. Iodine's uses include radiography, photography and pharmaceuticals.
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