Glassnode, a blockchain data firm, has conducted an analysis on the potential impact of a spot bitcoin exchange-traded fund (ETF) approval in the United States. According to their research, the introduction of a spot bitcoin ETF could lead to a significant influx of capital into the cryptocurrency market. This article will explore Glassnode's analysis and its implications for bitcoin's integration into mainstream financial markets.
Spot Bitcoin ETF: Catalyst for Demand and Volatility
Glassnode's report, published on November 20, suggests that the approval of a spot bitcoin ETF could result in increased demand and amplified volatility. The analysts at Glassnode estimate that up to $70.5 billion could enter the market from investors allocating a fraction of their assets from stocks, bonds, and gold. Even more conservative projections anticipate tens of billions entering the market in the initial years.
Direct and Regulated Bitcoin Exposure
Unlike existing bitcoin investment vehicles, a spot ETF would provide institutions with direct and regulated exposure to bitcoin. This could attract significant inflows, even if some capital shifts from current proxy funds. Historical data indicates that new access to bitcoin has led to increased demand for the asset.
Tightening Bitcoin's Circulating Supply
Glassnode's analysis highlights the impact of prolonged accumulation on bitcoin's circulating supply. Currently, over 76% of bitcoin is held long-term, which concentrates coins in holders who are less responsive to price swings. The research also shows that short-term and active trader supplies have reached multi-year lows. As investors move their assets into holding wallets, the illiquid supply of bitcoin continues to grow. On the other hand, exchange balances reflect limited market liquidity, despite rebounding trading volumes. Glassnode's research suggests that tradable bitcoin supply remains limited, even with increased interest from institutions.
Potential Price Impact of Spot ETF Inflows
Marcin Miłosierny, a contributor to Glassnode, explains that even modest spot ETF inflows could have a significant impact on bitcoin prices. Analyzing bitcoin's realized market cap can help gauge sensitivity to inflows. When small inflows result in large valuation changes, the potential market impact is high. Glassnode's report states that the introduction of a spot bitcoin ETF could dramatically shift market dynamics due to bitcoin's scarcity and the prevailing long-term holding pattern.
Institutional Involvement and Market Volatility
Glassnode concludes that the approval of a spot bitcoin ETF represents a pivotal moment for institutional involvement. However, the ensuing changes in supply and demand could also lead to increased market volatility. Traders and investors are advised to monitor the shifts between long-term holders and active traders to navigate the complex landscape of bitcoin onchain.
Glassnode's analysis highlights the potential impact of a spot bitcoin ETF approval in the United States. The introduction of such an ETF could bring in a significant amount of capital into the cryptocurrency market. It could also lead to increased market volatility due to changes in supply and demand. The approval of a spot bitcoin ETF signifies a crucial moment for institutional involvement in the bitcoin market.
Frequently Asked Questions
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.
While gold prices have been rising in recent years they are still low relative to other commodities, such as silver and oil.
Some experts believe that this could change very soon. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
They also pointed out that gold is gaining popularity due to its perceived value, and potential return.
These are some things you should consider when considering gold investing.
- Before you start saving money for retirement, think about whether you really need it. It is possible to save enough money to retire without investing in gold. The added protection that gold provides when you retire is a good option.
- Second, make sure you understand what you're getting yourself into before you start buying gold.There are several different types of gold IRA accounts available. Each type offers varying levels and levels of security.
- Remember that gold is not as safe as a bank account. You may lose your gold coins and never be able to recover them.
So, if you're thinking about buying gold, make sure you do your research first. Protect your gold if you already have it.
Can I buy gold with my self-directed IRA?
However, gold can only be purchased with your self-directed IRA. To do so, you must first open a brokerage account at TD Ameritrade. If you already have a retirement account, funds can be transferred to it.
The IRS allows individuals up to $5.500 annually ($6,500 if you are married and filing jointly). This can be contributed to a traditional IRA. Individuals are allowed to contribute $1,000 each ($2,000 if married or filing jointly) to a Roth IRA.
If you do decide that you want to invest, it is a good idea to buy physical bullion and not in futures. Futures contracts are financial instruments that are based on gold's price. You can speculate on future prices, but not own the metal. But, physical bullion is real bars of gold or silver that you can hold in one's hand.
Which precious metal is best to invest in?
This depends on what risk you are willing take and what kind of return you desire. Although gold has traditionally been considered a safe investment choice, it may not be the most profitable. If you are looking for quick profits, gold might not be the right investment. Silver is a better investment if you have patience and the time to do it.
If you don't care about getting rich quickly, gold is probably the way to go. Silver may be a better option for investors who want long-term steady returns.
What are the pros & con's of a golden 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 also disadvantages to this type of investment.
If you withdraw too many funds from your IRA at once, you may lose all your accumulated assets. 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.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management charges ranging anywhere from $10 to $50.
If you prefer to keep your money outside a bank, you'll need to purchase insurance. In order to make a claim, most insurers will require that you have a minimum amount in gold. Insurance that covers losses upto $500,000.
You will need to decide how much gold you wish to use if you opt for a gold IRA. Some providers limit how many ounces you can keep. Others let you choose your weight.
You will also have to decide whether to purchase futures or physical gold. Physical gold is more expensive than gold futures contracts. Futures contracts provide flexibility for purchasing gold. Futures contracts allow you to create a contract with a specified expiration date.
It is also important to choose the type of insurance coverage that you need. The standard policy does NOT include theft protection and loss due to fire or flood. It does provide coverage for damage from natural disasters, however. You might consider purchasing additional coverage if your area is at high risk.
Apart from insurance, you should consider the costs of storing your precious metals. 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. A custodian is responsible for keeping track of your investments. They also ensure that you adhere to federal regulations. Custodians can't sell assets. Instead, they must keep your assets for as long you request.
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. You should also specify how much you want to invest each month.
After filling out the forms, you'll need to send them to your chosen provider along with a check for a small deposit. The company will then review your application and mail you a letter of confirmation.
You should consult a financial planner before opening a Gold IRA. A financial planner can help you decide the type of IRA that is right for your needs. They can also help you lower your expenses by finding cheaper alternatives to purchasing insurance.
Is buying gold a good retirement plan?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
Physical bullion bar is the best way to invest in precious metals. However, there are many other ways to invest in gold. The best thing to do is research all options thoroughly and then make an informed decision based on what you want from your investments.
If you're not looking to secure your wealth, it may be worth considering purchasing shares in mining equipment or companies that extract gold. If you need cash flow from an investment, purchasing gold stocks is a good choice.
ETFs allow you to invest in exchange-traded funds. These funds give you exposure, but not actual gold, by investing in gold-related securities. These ETFs usually include stocks of precious metals refiners or gold miners.
What Does Gold Do as an Investment Option?
Supply and demand determine the gold price. Interest rates also have an impact on the price of gold.
Gold prices are volatile due to their limited supply. There is also a risk in owning gold, as you must store it somewhere.
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.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)
- Yahoo Finance – Barrick Gold Corporation Stock Price, News & Quote – Barrick Gold Corporation (GOLD).
- Are You a Good Candidate for a Gold IRA
- What are the Options Types, Spreads. Example. And Risk Metrics
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement account
How to Keep Physical Gold in an IRA
An easy way to invest gold is to buy shares from gold-producing companies. However, there are risks associated with this strategy. It isn't always possible for these companies to survive. Even if they survive, there's always the risk that they will lose money due fluctuations in gold prices.
Another option is to purchase physical gold. You can either open an account with a bank, online bullion dealer, or buy gold directly from a seller you trust. This option offers the advantages of being able to purchase gold at low prices and easy access (you don’t need to deal directly with stock exchanges). It's also easy to see how many gold you have. You'll get a receipt showing exactly what you paid, so you'll know if any taxes were missed. You also have a lower chance of theft than stocks.
There are however some disadvantages. You won't be able to benefit from investment funds or interest rates offered by banks. You can't diversify your holdings, and you are stuck with the items you have bought. Finally, the tax man might ask questions about where you've put your gold!
BullionVault.com is the best website to learn about gold purchases in an IRA.
By: Jamie Redman
Title: Glassnode Analysis: Spot Bitcoin ETF Approval May Bring in $70B Capital
Sourced From: news.bitcoin.com/glassnode-analysis-reveals-spot-bitcoin-etf-approval-could-unleash-70b-capital-influx/
Published Date: Thu, 23 Nov 2023 23:30:49 +0000