In a recent Medium post, former Bitmex CEO Arthur Hayes shared his bitcoin price forecast and highlighted the potential impact of spot bitcoin exchange-traded funds (ETFs) on the market. Hayes cautioned that a 30% to 40% correction could occur due to a dollar liquidity "rug pull," especially if U.S.-listed spot bitcoin ETFs have already begun trading.
Bitcoin Price Forecast and Colliding Variables
Hayes predicts that bitcoin could experience a healthy correction of 20% to 30% from its current level by early March. However, if spot bitcoin ETFs have already started trading, the correction could be even more severe. He expects three key variables to converge in March:
Fed's Reverse Repurchase Operations (RRPs)
Hayes anticipates that the RRP balance will reach $200 billion in early March. As the market wonders about what comes next, he emphasizes the need for an additional source of dollar liquidity to sustain the market's momentum.
Banks and Cash Swap
On March 12, Hayes points out that broke banks must find the cash to swap with the U.S. Treasuries and other eligible bonds they have repo'd with the Fed. This factor adds to the uncertainty and potential volatility in the market.
Fed Interest Rate Cut
The question of whether the Federal Reserve will cut interest rates at the upcoming Federal Open Market Committee (FOMC) meeting on March 20 is another variable to consider. The market currently expects the Fed to initiate its first rate cut of at least 0.25% since March 2021.
Potential Impact of Spot Bitcoin ETFs
Hayes highlights the potential scenario where the anticipation of significant fiat inflows into spot bitcoin ETFs drives the price of bitcoin above $60,000, nearing its all-time high of $70,000. However, he warns that this could lead to a 30% to 40% correction due to a dollar liquidity "rug pull." The SEC has received proposals to list and trade 11 spot bitcoin ETFs, with trading potentially starting as early as January 11.
Hayes concludes by sharing that his crypto portfolio primarily consists of bitcoin and ether, representing around 70% of his holdings. Given the liquidity challenges of other cryptocurrencies and their derivatives, he relies on bitcoin derivatives for a liquid macro crypto hedge. He predicts that if his forecasts are correct, the market will begin a meaningful correction around March 12th.
What are your thoughts on Arthur Hayes' predictions? Share your opinions in the comments section below.
Frequently Asked Questions
What precious metals could you invest in to retire?
Gold and silver are the best precious metal investments. They are both simple to purchase and sell, and they have been around for a long time. You should add them to your portfolio if you are looking to diversify.
Gold: Gold is one the oldest forms currency known to man. It is stable and very secure. It's a great way to protect wealth in times of uncertainty.
Silver: Silver has always been popular among investors. This is a great choice for people who want to avoid volatility. Silver, unlike gold, tends not to go down but up.
Platinium: Another form of precious metal is platinum, which is becoming more popular. It's resistant to corrosion and durable, similar to gold and silver. It is however more expensive than its counterparts.
Rhodium. Rhodium is used as a catalyst. It's also used in jewelry making. It is also quite affordable compared with other types of precious metals.
Palladium (or Palladium): Palladium can be compared to platinum, but is much more common. It's also more accessible. Investors looking to add precious and rare metals to their portfolios love it for these reasons.
How is gold taxed in an IRA?
The fair market value of gold sold is the basis for tax. When you purchase gold, you don't have to pay any taxes. It is not considered income. If you decide to sell it later, there will be a taxable gain if its price rises.
For loans, gold can be used to collateral. Lenders seek to get the best return when you borrow against your assets. This usually involves selling your gold. There's no guarantee that the lender will do this. They may hold on to it. Or, they may decide to resell the item themselves. Either way, you lose potential profit.
You should not lend against your gold if it is intended to be used as collateral. It's better to keep it alone.
Is it a good idea to open a Precious Metal IRA
Before opening an IRA, it is important to understand that precious metals aren't covered by insurance. There are no ways to recover the money you lost in an investment. This includes any loss of investments from theft, fire, flood or other circumstances.
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. These items are worth more today than they were when first produced.
Choose a reputable company with competitive rates and quality products if you are looking to open an IRA. It is also a smart idea to use a third-party trustee who will help you have access to your assets at all times.
Remember that you will not see any returns unless you are retired if you open an Account. Keep your eyes open for the future.
What is a Precious Metal IRA and How Can You Benefit From It?
An IRA with precious metals allows you to diversify retirement savings into gold and silver, palladium, rhodiums, iridiums, osmium, or other rare metals. These precious metals are extremely rare and valuable. These are excellent investments that will protect your wealth from inflation and economic instability.
Bullion can be bought through many channels, including online retailers, large coins dealers, and some grocery shops.
With a precious metal IRA, you invest in bullion directly rather than purchasing shares of stock. This will ensure that you receive annual dividends.
Precious metal IRAs are not like regular IRAs. They don't need paperwork and don't have to be renewed annually. You pay only a small percentage of your gains tax. Additionally, you have access to your funds at no cost whenever you need them.
What amount should I invest in my Roth IRA?
Roth IRAs are retirement accounts where you deposit your own money tax-free. The account cannot be withdrawn from until you are 59 1/2. If you decide to withdraw some of your contributions, you will need to follow certain rules. First, your principal (the original deposit amount) cannot be touched. This means that no matter how much you contribute, you can never take out more than what was initially contributed to this account. If you wish to withdraw more than you originally contributed, you will have to pay taxes.
The second rule says that you cannot withdraw your earnings without paying income tax. When you withdraw, you will have to pay income tax. 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. You can only take out what you originally contributed.
The $4,000 you take out of your earnings would be subject to taxes. You'd still owe $1,500 in taxes. In addition, 50% of your earnings will be subject to tax again (half of 40%). So even though you received $7,000 in Roth IRA contributions, you only received $4,000.
There are two types if Roth IRAs, Roth and Traditional. Traditional IRAs allow pre-tax contributions to be deducted from your taxable tax income. You can withdraw your contributions plus interest from your traditional IRA when you retire. There are no restrictions on the amount you can withdraw from a Traditional IRA.
A Roth IRA doesn't allow you to deduct your contributions. You can withdraw your entire contribution, plus accrued interests, after you retire. Unlike a traditional IRA, there is no minimum withdrawal requirement. You don’t have to wait for your turn 70 1/2 years before you can withdraw your contributions.
What are the pros & con's of a golden IRA?
The main advantage of an Individual Retirement Account (IRA) over a regular savings account is that you don't have to pay taxes on any interest earned. An IRA is a great option for those who want to save money, but don't want tax on any 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. The IRS may prevent you from taking out your IRA funds until you reach 59 1/2. If you do decide to withdraw funds from your IRA, you'll likely need to pay a penalty fee.
Another disadvantage is that you must pay fees to manage your IRA. Most banks charge 0.5% to 2.0% per annum. Other providers may charge monthly management fees, ranging between $10 and $50.
Insurance is necessary if you wish to keep your money safe from the banks. Insurance companies will usually require that you have at least $500,000. You may be required by some insurers to purchase insurance that covers losses as high as $500,000.
You will need to decide how much gold you wish to use if you opt for a gold IRA. Some providers limit the number of ounces of gold that you can own. Others allow you the freedom to choose your own weight.
Also, you will need to decide if you want to buy physical gold futures contracts or physical gold. Futures contracts for gold are less expensive than physical gold. Futures contracts offer flexibility for buying gold. They enable you to establish a contract with an expiration date.
You also need to decide the type and level of insurance coverage you want. The standard policy does not include theft protection or loss caused by fire, flood, earthquake. It does offer coverage for natural disasters. If you live near a high-risk region, you might want to consider additional coverage.
Additional to your insurance, you will need to consider how much it costs to store your gold. Storage costs are not covered by insurance. Banks charge between $25 and $40 per month for safekeeping.
A qualified custodian is required to help you open a Gold IRA. A custodian keeps track of your investments and ensures that you comply with federal regulations. Custodians are not allowed to sell your assets. They must instead keep them for as long as you ask.
After you have decided on the type of IRA that best suits you, you will need to complete paperwork detailing your goals. Information about your investments such as stocks and bonds, mutual fund, or real property should be included in your plan. The plan should also include information about how much you are willing to invest each month.
After filling in the forms, please send them to the provider. After receiving your application, the company will review it and mail you a confirmation letter.
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.
What are the advantages of a IRA with a gold component?
There are many benefits to a gold IRA. It can be used to diversify portfolios and is an investment vehicle. You decide how much money is put in each account and when it is withdrawn.
Another option is to rollover funds from another retirement account into a IRA with gold. If you are planning to retire early, this makes it easy to transition.
The best thing about investing in gold IRAs is that you don’t need any special skills. They're readily available at almost all banks and brokerage firms. Withdrawals can happen automatically, without any fees or penalties.
But there are downsides. Gold has always been volatile. It is important to understand why you are investing in gold. Do you want safety or growth? Are you looking for growth or insurance? Only then will you be able make informed decisions.
If you plan on keeping your gold IRA alive for a while, you may want to consider purchasing more than 1 ounce of pure gold. One ounce won't be enough to meet all your needs. Depending on the purpose of your gold, you might need more than one ounce.
You don't have to buy a lot of gold if your goal is to sell it. You can even get by with less than one ounce. These funds won't allow you to purchase anything else.
- 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)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- 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)
- Yahoo Finance – Barrick Gold Corporation Stock Price, News & Quote – Barrick Gold Corporation (GOLD).
Tips for Investing Gold
Investing in Gold is one of the most popular investment strategies worldwide. There are many benefits to investing in gold. There are many ways you can invest in gold. Some people prefer to buy gold coins in physical form, while others prefer to invest in gold ETFs.
Before you buy any type of gold, there are some things that you should think about.
- First, you must check whether your country allows you to own gold. If it is, you can move on. You can also look at buying gold abroad.
- Secondly, you should know what kind of gold coin you want. You have options: you can choose from yellow gold, white or rose gold.
- You should also consider the price of gold. Start small and build up. It is important to diversify your portfolio whenever you purchase gold. Diversifying assets should include stocks, bonds real estate mutual funds and commodities.
- You should also remember that gold prices can change often. It is important to stay up-to-date with the latest trends.
By: Kevin Helms
Title: Former Bitmex CEO Arthur Hayes Warns of Potential 30% Correction in Bitcoin Market
Sourced From: news.bitcoin.com/former-bitmex-chief-predicts-30-btc-correction-warns-spot-bitcoin-etfs-could-make-it-worse/
Published Date: Mon, 08 Jan 2024 02:30:37 +0000