Bitcoin's Volatile Trading Day
On January 11, 2024, at 11 a.m. Eastern Time (ET), the newly launched spot bitcoin exchange-traded funds (ETFs) made a significant impact with a trading volume of $2.3 billion. However, the afternoon brought a dramatic turn of events as bitcoin's spot markets experienced a steep decline, causing prices to fall below the $46,000 mark after briefly reaching $49,000.
Early Morning Surge and Subsequent Drop
Earlier in the day, around 9 a.m. (ET), bitcoin (BTC) reached its peak value of $49,048 on Bitstamp. Unfortunately, this surge to the $49K level was short-lived, and BTC's value plummeted below the $46K barrier, hitting a low of $45,700 per unit. By 11 a.m. (ET), Bloomberg's Senior ETF Analyst, Eric Balchunas, reported that the new spot bitcoin ETFs, along with Grayscale's GBTC, had collectively achieved a trading volume of $2.3 billion.
"The 10 fresh spot bitcoin ETFs have seen $1.3b in trading volume so far (as a group they already topped BITO's record). If we add in GBTC we get to $2.3 [billion]," said Balchunas. "And if we add in BITO (which is having record day too but isn't part of 'spot' race) we get $3.5b for the complex," he added. Since then, BTC's spot market price has been incredibly volatile.
Market Reaction and Liquidations
The commencement of trading likely triggered an initial surge in demand, followed by a wave of short-term profit-taking, a common pattern observed after significant market events. Bitcoin's 24-hour trading volume stands at an impressive $57.45 billion, contributing to the total $192.48 billion traded across the entire cryptocurrency ecosystem. However, this rapid surge and subsequent drop led to significant liquidations of BTC long positions, with $53.58 million wiped out in just four hours.
According to coinglass.com's liquidation metrics, over $119 million in BTC longs were also liquidated in the past 24 hours. The introduction of spot bitcoin ETFs injected short-term volatility into the market, resulting in larger price swings and increased uncertainty and risk in the crypto market. These fluctuations are not uncommon following major announcements on Wall Street, as markets adjust to new information and investors rebalance their portfolios.
Bitcoin Futures and Options
Alongside the spot bitcoin ETFs, both bitcoin options and bitcoin futures are experiencing notable developments. The total open interest in bitcoin options is on an upward trajectory, reaching its peak at the end of December 2023. Similarly, the total open interest in bitcoin futures is also seeing a resurgence.
Leading the pack in bitcoin futures open interest is CME Group, with $6.59 billion, while Binance follows with $4.53 billion as of Thursday afternoon at 1:30 p.m. (ET).
Share Your Thoughts
What are your thoughts on bitcoin's market action on Thursday when the spot bitcoin ETFs began trading? Feel free to share your opinions and insights in the comments section below.
Frequently Asked Questions
What are the benefits of having a gold IRA?
An Individual Retirement Account (IRA) is the best way to put money towards retirement. It will be tax-deferred up until the time you withdraw it. You are in complete control of how much you take out each fiscal year. And there are many different types of IRAs. Some are better suited for college students. Some are better suited for investors who want higher returns. Roth IRAs permit individuals to contribute after the age 59 1/2. Any earnings earned at retirement are subject to tax. Once they start withdrawing money, however, the earnings aren’t subject to tax again. This type account may make sense if it is your intention to retire early.
Because you can invest money in many asset classes, a gold IRA works similarly to other IRAs. Unlike a regular IRA, you don't have to worry about paying taxes on your gains while you wait to access them. People who want to invest their money rather than spend it make gold IRA accounts a great option.
Another benefit to owning IRA gold is the ability to withdraw automatically. That means you won't have to think about making deposits every month. To avoid missing a payment, direct debits can be set up.
Finally, gold is one of the safest investment choices available today. Its value is stable because it's not tied with any one country. Even during economic turmoil, gold prices tend to stay relatively stable. Gold is a good option for protecting your savings from inflation.
Should You Buy or Sell Gold?
Gold was considered a safety net for investors during times of economic turmoil in the past. However, today many people are turning away from traditional investments such as stocks and bonds and instead looking toward precious metals such as gold.
Gold prices have been on an upward trend over recent years, but they remain relatively low compared to other commodities such as oil and silver.
Experts think this could change quickly. They say that gold prices could rise dramatically with another global financial crisis.
They also pointed out that gold is gaining popularity due to its perceived value, and potential return.
Consider these things if you are thinking of investing in gold.
- Before you start saving money for retirement, think about whether you really need it. It is possible to save for retirement while still investing your gold savings. However, when you retire at age 65, gold can provide additional protection.
- Second, be sure to understand your obligations before you purchase gold. Each one offers different levels security and flexibility.
- Keep in mind that gold may not be as secure as a bank deposit. Your gold coins may be lost and you might never get them back.
So, if you're thinking about buying gold, make sure you do your research first. You should also ensure that you do everything you can to protect your gold.
How can you withdraw from an IRA of Precious Metals?
First, determine if you would like to withdraw money directly from an IRA. Next, ensure you have enough cash on hand to pay any penalties or fees that could be associated with withdrawing funds.
If you are willing to pay a penalty for early withdrawal, you should consider opening a taxable brokerage account instead of an IRA. If you decide to go with this option, you will need to take into account the taxes due on the amount you withdraw.
Next, you need to determine how much money is going to be taken out from your IRA. This calculation depends on several factors, including the age when you withdraw the money, how long you've owned the account, and whether you intend to continue contributing to your retirement plan.
Once you know how much of your total savings to convert to cash, it's time to choose the type of IRA that you want. While traditional IRAs are tax-free, Roth IRAs can be withdrawn at any time after you reach 59 1/2. However, Roth IRAs will charge income taxes upfront and allow you to access your earnings later without additional taxes.
Finally, you'll need to open a brokerage account once these calculations are completed. Brokers often offer promotional offers and signup bonuses to encourage people into opening accounts. It is better to open an account with a debit than a creditcard in order to avoid any unnecessary fees.
When it comes time to withdraw your precious metal IRA funds, you will need a safe location where you can keep your coins. Some storage facilities will accept bullion bars, others require you to buy individual coins. You'll have to weigh the pros of each option before you make a decision.
Bullion bars, for example, require less space as you're not dealing with individual coins. However, you'll need to count every coin individually. However, you can easily track the value of individual coins by storing them in separate containers.
Some prefer to store their coins in a vault. Some people prefer to store their coins safely in a vault. No matter what method you use, it is important to keep your bullion safe so that you can reap its benefits for many more years.
- 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)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.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)
- 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)
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement accounts
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- Want to Keep Gold in Your IRA at Home? It's not exactly legal – WSJ
Three ways to invest in gold for retirement
It's crucial to understand where gold fits in your retirement strategy. You have many options for investing in gold if there is a 401K account at your workplace. You may also be interested in investing in gold beyond your workplace. If you have an IRA (Individual Retirement Account), a custodial account could be opened at Fidelity Investments. If precious metals aren't your thing, you may be interested in buying them from a dealer.
These are three simple rules to help you make an investment in gold.
- Buy Gold With Your Cash – Do not use credit cards to purchase gold. Instead, instead, transfer cash to your accounts. This will help protect you against inflation and keep your purchasing power high.
- Own Physical Gold Coins – You should buy physical gold coins rather than just owning a paper certificate. The reason is that it's much easier to sell physical gold coins than certificates. Physical gold coins don't require storage fees.
- Diversify Your Portfolio – Never put all of your eggs in one basket. Also, diversify your wealth and invest in different assets. This helps to reduce risk and provides more flexibility when markets are volatile.
By: Jamie Redman
Title: Bitcoin Reaches $49K High Before Dropping, as ETFs Record $2.3B in Trades by Mid-Day
Sourced From: news.bitcoin.com/record-2-3b-in-bitcoin-etf-trades-as-btc-rockets-to-49k-then-plummets-below-46k/
Published Date: Thu, 11 Jan 2024 19:00:36 +0000