A Bitcoin ETF Approval Could Trigger Major Market Movements
As the Securities and Exchange Commission (SEC) nears its decision on several pending bitcoin ETF applications, market participants are preparing for potential market impact. Analysts are considering the possibility of a "buy the rumor, sell the news" situation.
The anticipation of the SEC's approval of a Bitcoin ETF has led to speculation on how market participants should position themselves. It is worth noting that Bitcoin's price has experienced a significant rise over the past year, particularly since September 2023. Some speculate that this increase may be attributed to savvy market participants front-running the approval announcement. In this case, it may be prudent to sell into the announcement of approval. The decision, expected between January 8th and 10th, has investors and analysts assessing the implications of approval on Bitcoin's price dynamics.
This current scenario appears to follow the classic "buy the rumor, sell the news" pattern. Financial markets often see asset prices rise leading up to anticipated events as markets act as forward pricing mechanisms. Theoretically, announcements like the highly anticipated Bitcoin ETF approval should already be reflected in the asset's market price at the time of the announcement.
However, once the expected event becomes public knowledge, some investors may choose to sell their shares to secure gains. This can occur even if the news is positive because the market may have overestimated its impact or investors may simply be taking profits. Essentially, the actual event may not have as much of a positive impact as the initial rumor or expectation. This pattern is especially relevant in the volatile and sentiment-driven cryptocurrency market, where news and expectations can significantly influence prices.
Senior Analyst Vetle Lunde from K33 Research believes that there is a 75% chance of the ETF approval being a sell-the-news event. He points out that traders have significant exposure ahead of the verdict, with derivatives pushing massive premiums following Bitcoin's continuous upward momentum over the past three months. A sell-the-news event could become a self-fulfilling prophecy as a significant portion of short-term market participants view the event as an opportunity for profit-taking.
Looking back at history, Bitcoin has experienced sell-the-news events before. In 2017, Bitcoin's value reached $20,000 after the CME Group launched Bitcoin futures. Similarly, in 2021, Bitcoin reached a high of $65,000 following Coinbase's successful IPO, only to see its value decline in the following months.
Capriole Investments recommends caution leading up to a potential ETF approval, suggesting that short-term sell-the-news style price action may occur. However, they also note that the approval could be a major catalyst for long-term capital flows into Bitcoin.
Analysts consistently emphasize the importance of time frame in analyzing Bitcoin price action after approval. There is a general consensus that over longer time horizons, the approval will be bullish for Bitcoin. Michael Anderson of Framework Ventures highlights this in a recent episode of Hidden Forces, saying, "What really matters is what happens after the approvals and after the launches. Because that's when the real buying starts."
Share your thoughts and opinions on whether a Bitcoin ETF approval would be a sell-the-news event in the comments section below.
Frequently Asked Questions
What are the fees for an IRA that holds gold?
$6 per month is the Individual Retirement Account Fee (IRA). This fee includes account maintenance fees as well as any investment costs related to your selected investments.
You may have to pay additional fees if you want to diversify your portfolio. The fees you pay will vary depending on the type of IRA that you choose. For example, some companies offer free checking accounts but charge monthly fees for IRA accounts.
Most providers also charge annual management costs. These fees range from 0% to 1%. The average rate is.25% each year. These rates can be waived if the broker is TD Ameritrade.
What is a gold IRA account?
You can purchase physical bullion gold coins at any point in time. You don't have a retirement date to invest in gold.
You can keep gold in an IRA forever. Your gold holdings will not be subject to tax when you are gone.
Your heirs can inherit your gold and avoid capital gains taxes. Because your gold doesn't belong to the estate, it's not necessary to include it on your final estate plan.
To open a Gold IRA, you'll need to first set up an Individual Retirement Account (IRA). Once you've done so, you'll be given an IRA custodian. This company acts as a middleman between you and the IRS.
Your gold IRA Custodian will manage the paperwork and submit all necessary forms to IRS. This includes filing annual reports.
Once your gold IRA is established, you can purchase gold bullion coins. Minimum deposit required is $1,000 The minimum deposit is $1,000. However, you will receive a higher percentage of interest if your deposit is greater.
You'll have to pay taxes if you take your gold out of your IRA. You will be liable for income taxes and penalties if you take the entire amount.
However, if you only take out a small percentage, you may not have to pay taxes. However, there are exceptions. There are some exceptions. For instance, if you take out 30% or more from your total IRA assets, federal income taxes will apply plus a 20 percent penalty.
You shouldn't take out more then 50% of your total IRA assets annually. A violation of this rule can lead to severe financial consequences.
Do you need to open a Precious Metal IRA
You should be aware that precious metals cannot be covered by insurance. There is no way to recover money that you have invested in precious metals. This includes investments that have been damaged by fire, flooding, theft, and so on.
This type of loss can be avoided by investing in physical silver and gold coins. These items have been around for thousands of years and represent real value that cannot be lost. If you were to sell them today, you would likely receive more than what you paid for them when they were first minted.
Choose a reputable company with competitive rates and quality products if you are looking to open an IRA. It's also wise to consider using a third-party custodian who will keep your assets safe while giving you access to them anytime.
You won't get any returns until you retire if you open an account. So, don't forget about the future!
Is physical gold allowed in an IRA.
Gold is money, not just paper currency or coinage. It's an asset that people have used for thousands of years as a store of value, a way to keep wealth safe from inflation and economic uncertainty. Investors use gold today as part of their diversified portfolio, because it tends to perform better in times of financial turmoil.
Today, Americans prefer precious metals like silver and gold to stocks and bonds. While owning gold doesn't guarantee you'll make money investing in gold, there are several reasons why it may make sense to consider adding gold to your retirement portfolio.
One reason is that gold historically performs better than other assets during financial panics. The S&P 500 declined 21 percent during the same period. Gold prices increased nearly 100 per cent between August 2011 – early 2013. Gold was one asset that outperformed stocks in turbulent market conditions.
One of the best things about investing in gold is its virtually zero counterparty risk. If your stock portfolio goes down, you still own your shares. You can still own your gold even if the company where you invested fails to pay its debt.
Finally, the liquidity that gold provides is unmatched. This allows you to sell your gold whenever you want, unlike many other investments. The liquidity of gold makes it a good investment. This allows you to profit from short-term fluctuations on the gold market.
Should You Get Gold?
Gold was a safe investment option for those who were in financial turmoil. Many people are shifting away from traditional investments like bonds or stocks to instead look toward precious metals such 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.
Some experts think that this could change in the near future. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
They also mention that gold is becoming more popular due to its perceived worth and potential return.
These are some things you should consider when considering gold investing.
- First, consider whether or not you need the money you're saving for retirement. You can save money for retirement even if you don't invest in gold. Gold does offer an extra layer of protection for those who reach retirement age.
- Second, ensure you fully understand the risks involved in buying gold. Each offer varying degrees of security and flexibility.
- Don't forget that gold does not offer the same safety level as a bank accounts. Losing your gold coins could result in you never being able to retrieve them.
So, if you're thinking about buying gold, make sure you do your research first. If you already have gold, make sure you protect it.
How Do You Make a Withdrawal from a Precious Metal IRA?
First, determine if you would like to withdraw money directly from an IRA. Then make sure you have enough cash to cover any fees or penalties that may come with withdrawing funds from your retirement plan.
An IRA is not the best option if you don't mind paying a penalty for early withdrawal. Instead, open a taxable brokerage. 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'll need to figure out how much money you will take out of 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 have an idea of the amount of your total savings you wish to convert into cash you will need to decide what type of IRA you want. Traditional IRAs allow for you to withdraw funds without tax when you turn 59 1/2. Roth IRAs, on the other hand, charge income taxes upfront but you can access your earnings later and pay no additional taxes.
Once the calculations have been completed, it's time to open a brokerage accounts. To encourage customers to open accounts, brokers often offer signup bonuses and promotions. Avoid unnecessary fees by opening an account with your debit card, rather than your credit card.
When it's time to make withdrawals from your precious-metal IRA, you'll need a place to keep your coins safe. Some storage facilities can accept bullion bar, while others require you buy individual coins. Either way, you'll need to weigh the pros and cons of each before choosing one.
Bullion bars, for example, require less space as you're not dealing with individual coins. However, each coin will need to be counted individually. However, you can easily track the value of individual coins by storing them in separate containers.
Some prefer to keep their money in a vault. Others prefer to store them in a safe deposit box. Whichever method you choose, make sure you store your bullion safely so you can enjoy its benefits for years to come.
Which precious metal is best to invest in?
This question is dependent on the amount of risk you are willing and able to accept as well as the type of return you desire. While gold is considered a safe investment option, it can also be a risky choice. For example, if your goal is to make quick money, gold may not suit you. You should invest in silver if you have the patience and time.
If you don’t want to be rich fast, gold might be the right choice. However, silver might be a better option if you're looking for an investment that provides steady returns over long periods.
- 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)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Do You Need a Gold IRA to Get Retirement?
- What are the Options? Types, Spreads, Example and Risk Metrics
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement account
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
Gold IRAs: A Growing Trend
As investors seek to diversify their portfolios while protecting themselves from inflation, the trend towards gold IRAs is on the rise.
Gold IRA owners can now invest in physical gold bullion or bars. It can be used for tax-free growth and provides an alternative investment option for those concerned about stocks and bonds.
An investor can use a gold IRA to manage their assets and not worry about market volatility. The gold IRA can be used to protect against inflation or other potential problems.
Investors also get the unique benefits of owning physical Gold, including its durability, portability, flexibility, and divisibility.
In addition, the gold IRA offers several other advantages, including the ability to quickly transfer ownership of the gold to heirs and the fact that the IRS does not consider gold a currency or a commodity.
This means that investors who are looking for financial safety and security are becoming more interested in the gold IRA.
By: David Sencil
Title: Experts Weigh in on Bitcoin ETF Approval As Sell-the-News Event
Sourced From: news.bitcoin.com/experts-weigh-in-on-bitcoin-etf-approval-as-sell-the-news-event/
Published Date: Fri, 05 Jan 2024 20:30:27 +0000