Spot bitcoin exchange-traded funds (ETFs) have surpassed silver to become the second-largest commodity in the U.S. ETF market, trailing only gold. The recent approval of spot bitcoin ETFs by the U.S. Securities and Exchange Commission has fueled this significant shift. Bitcoin ETFs, including the newly converted Grayscale Bitcoin Trust ETF (GBTC), now hold nearly $28 billion in assets under management (AUM). This amount starkly contrasts with the $11 billion AUM of silver ETFs, as reported by etfdb.com.
The Rise of Bitcoin ETFs
While gold maintains its leading position with approximately $95 billion in AUM, the rapid rise of spot bitcoin ETFs demonstrates the growing acceptance and popularity of the digital asset. Bitcoin, often considered the digital counterpart to gold, has showcased its robust appeal in the ETF market, which has traditionally been dominated by conventional commodities.
The initial response to spot bitcoin ETFs was overwhelmingly positive, with an impressive $9.6 billion in trading volume recorded within the first three days of trading. This historic figure highlights the immense interest and demand for bitcoin ETFs.
Analyzing the Holdings
To understand how bitcoin ETFs surpassed silver in AUM, an analysis of the holdings was undertaken. The total number of bitcoins held in various ETFs, excluding GBTC, was sourced from a post by CC15Capital on X. This figure was then combined with the number of bitcoins held by GBTC, as reported by Coinglass. Multiplying this aggregated total by the current spot price of Bitcoin provides an approximate value of $28 billion, which is higher than the AUM for silver ETFs, as listed on etfdb.com.
The Role of Grayscale's Conversion
Grayscale's conversion of its existing Bitcoin trust into an ETF played a pivotal role in this shift, instantly creating the world's largest spot bitcoin ETF. However, some ETF market analysts caution against reading too much into the rapidity with which bitcoin overtook silver.
James Seyffart, a Bloombert ETF analyst, explained that interest in spot bitcoin didn't solely ramp up with the launch of spot bitcoin ETFs. Much of it was driven by Grayscale's GBTC conversion. Seyffart stated, "that means it was #2 as soon as the conversion happened! So not really 'news' per se haha."
Eric Balchunas, Bloomberg's senior ETF analyst, shared a similar sentiment, stating, "yeah I get the whole bigger than silver excitement, but I just don't count it as impressive given 95% of it was simply GBTC converting." He added, "These milestones are much harder when you have a brand new ETF with different standards of measure."
The Future of Bitcoin ETFs
Considering the rapid growth and increasing mainstream acceptance of spot bitcoin ETFs, it raises the question of whether they will eventually surpass gold ETFs for the number one spot. Share your thoughts and opinions about this subject in the comments section below.
Frequently Asked Questions
How to Open a Precious Metal IRA?
The first step is to decide if you want an Individual Retirement Account (IRA). To open the account, complete Form 8606. Then you must fill out Form 5204 to determine what type of IRA you are eligible for. This form should be filled within 60 calendar days of opening the account. You can then start investing once you have this completed. You could also opt to make a contribution directly from your paycheck by using payroll deduction.
If you opt for a Roth IRA, you must complete Form 8903. Otherwise, it will be the same process as an ordinary IRA.
To qualify for a precious Metals IRA, there are specific requirements. The IRS states that you must be at least 18 and have earned income. Your annual earnings cannot exceed $110,000 ($220,000 if you are married and file jointly) for any tax year. You must also contribute regularly. These rules apply to contributions made directly or through employer sponsorship.
You can invest in precious metals IRAs to buy gold, palladium and platinum. But, you'll only be able to purchase physical bullion. You won't have the ability to trade stocks or bonds.
Your precious metals IRA can be used to directly invest in precious metals-related companies. This option may be offered by some IRA providers.
An IRA is a great way to invest in precious metals. However, there are two important drawbacks. They aren't as liquid as bonds or stocks. It's also more difficult to sell them when they are needed. Second, they don’t produce dividends like stocks or bonds. So, you'll lose money over time rather than gain it.
Should You Buy or Sell Gold?
In the past, gold was considered a haven for investors during economic turmoil. Many people are now turning their backs on traditional investments like stocks and bonds, and instead look to precious metals like Gold.
Although gold prices have shown an upward trend in recent years, they are still relatively low when compared to other commodities like oil and silver.
Experts believe this could change soon. Experts predict that gold prices will rise sharply in the wake of another global financial collapse.
They also noted that gold is growing in popularity because of its perceived value as well as potential return.
Consider these things if you are thinking of investing in gold.
- Consider whether you will actually need the money that you are saving for retirement. You can save for retirement and not invest your savings in gold. However, you can still save for retirement without putting your savings into gold.
- Second, be sure to understand your obligations before you purchase gold. Each type offers varying levels and levels of security.
- Last but not least, gold doesn't provide the same level security as a savings account. Losing your gold coins could result in you never being able to retrieve them.
Do your research before you buy gold. Protect your gold if you already have it.
Is it possible to hold a gold ETF within a Roth IRA
A 401(k) plan may not offer this option, but you should consider other options, such as an Individual Retirement Account (IRA).
Traditional IRAs allow for contributions from both employees and employers. An Employee Stock Ownership Plan (ESOP) is another way to invest in publicly traded companies.
An ESOP provides tax advantages because employees share ownership of company stock and profits the business generates. The tax rate on money that is invested in an ESOP is lower than if it was held in the employees' hands.
Also available is an Individual Retirement Annuity. An IRA allows for you to make regular income payments during your life. Contributions made to IRAs are not taxable.
What precious metals do you have that you can invest in for your retirement?
It is gold and silver that are the best precious metal investment. Both can be easily bought and sold, and have been around since forever. They are a great way to diversify your portfolio.
Gold: The oldest form of currency known to man is gold. It's stable and safe. This makes it a good option to preserve wealth in uncertain times.
Silver: Investors have always loved silver. This is a great choice for people who want to avoid volatility. Silver is more volatile than gold. It tends to rise rather than fall.
Platinium: Platinum is another form of precious metal that's becoming increasingly popular. Like gold and silver, it's very durable and resistant to corrosion. It is, however, more expensive than its competitors.
Rhodium: Rhodium can be used in catalytic convertors. It's also used in jewelry making. And, it's relatively cheap compared to other types of precious metals.
Palladium: Palladium has a similarity to platinum but is more rare. It's also less expensive. It's a popular choice for investors who want to add precious metals into their portfolios.
How much should I contribute to my Roth IRA account?
Roth IRAs are retirement accounts where you deposit your own money tax-free. These accounts cannot be withdrawn until you turn 59 1/2. You must adhere to certain rules if you are going to withdraw any of your contributions prior. First, your principal (the deposit amount originally made) is not transferable. This means that no matter how much you contribute, you can never take out more than what was initially contributed to this account. You must pay taxes on the difference if you want to take out more than what you initially contributed.
The second rule states that income taxes must be paid before you can withdraw earnings. So, when you withdraw, you'll pay taxes on those 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. Federal income taxes would apply to the earnings. You would be responsible for $3500 That leaves you with only $6,500 left. Because you can only withdraw what you have initially contributed, this is all you can take out.
So, if you were to take out $4,000 of your earnings, you'd still owe taxes on the remaining $1,500. You would also lose half of your earnings because they are subject to another 50% tax (half off 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.
There are two types if Roth IRAs, Roth and Traditional. A traditional IRA allows for you to deduct pretax contributions of your taxable income. Your traditional IRA can be used to withdraw your balance and interest when you are retired. You have the option to withdraw any amount from a traditional IRA.
Roth IRAs are not allowed to allow you deductions for contributions. Once you are retired, however, you may withdraw all of your contributions plus accrued interest. There is no minimum withdrawal limit, unlike traditional IRAs. You don't have to wait until you turn 70 1/2 years old before withdrawing your contribution.
Is gold a good choice for an investment IRA?
For anyone who wants to save some money, gold can be a good investment. You can also diversify your portfolio by investing in gold. There's more to gold that meets the eye.
It has been used as a currency throughout history and is still a popular method of payment. It's often referred to as “the world's oldest currency.”
But gold, unlike paper currency, which is created by governments, is mined out from the ground. It is very valuable, as it is rare and hard to create.
Gold prices fluctuate based on demand and supply. People tend to spend more when the economy is healthy, which means that fewer people are able to mine gold. The value of gold rises as a consequence.
On the flipside, people may save cash rather than spend it when the economy slows. This results in more gold being produced, which drives down its value.
It is this reason that gold investing makes sense for businesses and individuals. You will benefit from economic growth if you invest in gold.
Your investments will also generate interest, which can help you increase your wealth. Plus, you won't lose money if the value of gold drops.
What are the pros and disadvantages of a gold IRA
An Individual Retirement account (IRA) is a better option than regular savings accounts in that interest earned is exempted from tax. This makes an IRA a great choice for people who are looking to save money but don’t want to pay any tax on the interest earned. However, there are disadvantages to this type investment.
You may lose all your accumulated savings if you take too much out of your IRA. You might also not be able to withdraw from your IRA until the IRS deems you to be 59 1/2. If you do withdraw funds from your IRA you will most likely be required to pay a penalty.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5%-2.0% per year. Others charge management fees that range from $10 to $50 per month.
If you prefer your money to be kept out of a bank, then you will need insurance. A majority of insurance companies require that you possess a minimum amount gold to be eligible for a claim. Insurance that covers losses upto $500,000.
If you decide to open a gold IRA, it is important to know how much you can use. Some providers limit how many ounces you can keep. Others allow you to pick your weight.
Also, you will need to decide if you want to buy physical gold futures contracts or physical gold. Gold futures contracts are more expensive than physical gold. Futures contracts offer flexibility for buying gold. They enable you to establish a contract with an expiration date.
You will also have to decide which type of insurance coverage is best for you. The standard policy does NOT include theft protection and loss due to fire or flood. It does include coverage for damage due to natural disasters. You might consider purchasing additional coverage if your area is at high risk.
Additional to your insurance, you will need to consider how much it costs to store your gold. Insurance doesn't cover storage costs. In addition, most banks charge around $25-$40 per month for safekeeping.
You must first contact a qualified custodian before you open a gold IRA. Custodians keep track of your investments and ensure compliance with federal regulations. Custodians aren't allowed to sell your assets. Instead, they must maintain them for as long a time as you request.
Once you've decided which type of IRA best suits your needs, you'll need to fill out paperwork specifying your goals. You should also include information about your desired investments, such as stocks or bonds, mutual funds, real estate, and mutual funds. Your monthly investment goal should be stated.
You will need to fill out the forms and send them to your chosen provider together with a check for small deposits. After reviewing your application, the company will send you a confirmation mail.
When opening a gold IRA, you should consider using a financial planner. Financial planners are experts in investing and will help you decide which type of IRA works best for your situation. They can also help reduce your costs by suggesting cheaper options for purchasing insurance.
Statistics
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (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)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
External Links
wsj.com
- Saddam Hussein’s InvasionHelped Uncage a Bear In 1989 – WSJ
- Do you want to keep your IRA gold at home? It's not exactly legal – WSJ
