Latest findings indicate a significant rotation among bitcoin investors from long-term holders to short-term speculators. This transition reveals that the cryptocurrency market is on a path to recovery from the prolonged bear market.
Study Suggests Crypto Winter Recuperation as Long-term Holders Transition to Short-term Speculators
The recent report from Glassnode, a leading on-chain analytics company, provides an in-depth analysis of the transitions of bitcoin (BTC) ownership over time. The study focuses on the wave of coins transitioning from long-term holders, who acquired bitcoin during the bear market, to short-term speculators seeking profit from price fluctuations.
Glassnode's Unique Approach: The "Realized Capital"
Glassnode adopts a unique metric known as "realized capital" to calculate the total historical cost to acquire all existing bitcoins. This provides a perspective into the last movement of coins between investors. Glassnode subsequently segments the bitcoin supply into "age bands" that depict the distribution of dormant coins held for different time periods.
Observing the Market Trends
"During market uptrends, older coins are spent and transferred from long-term holders to newer investors," the report suggests. "During market downtrends, speculators lose interest and gradually transfer coins to longer-term holders."
The report identifies coins held for 1-2 years as a critical long-term holder group. This group’s holdings peak during bear market bottoms as conviction buyers accumulate. Conversely, bitcoins held for less than a month represent short-term speculators. Their share of the bitcoin supply surges during bull markets as fresh money flows in.
Understanding Market Cycles through Glassnode's Models
Glassnode's models, by comparing the holdings of these groups, provide insight into the market's cycle stage. The current structure is similar to the recovery phase following a significant bear market bottom, akin to the phases seen in 2016 and 2019. While Bitcoin’s price has bounced back from its lows, long-term holders continue to control over 80% of the supply.
As per the report, "The bitcoin supply remains strongly dominated by the HODLer cohort, with a super-majority of coins now being older than 6-months."
Glassnode's Profitability Models for Short and Long-term Holders
Along with tracking coin age, Glassnode also models the profitability of short and long-term holders based on their average cost basis. This helps gauge the financial incentive to sell versus hold at various price levels. Once again, the firm’s models suggest that the market may have entered an early bullish phase where long-term holders are profitable, but short-term traders are nearing the break-even point.
We would love to hear your thoughts on the recent Glassnode report about the changing hands of bitcoin ownership. Please feel free to share your views on this subject below.
Frequently Asked Questions
How do you withdraw from an IRA that holds precious metals?
If you have a precious IRA company such Goldco International Inc. account, you may be tempted to withdraw your funds. When you sell your metals, the value of those funds will be higher than if it was kept in the account.
If you are unsure how to withdraw money from your precious metal IRA, here is what you need to know.
First, check to see if your precious metal IRA provider permits withdrawals. This option is available from some companies, but not all.
Second, you should determine if your metals are tax-deferred. Most IRA providers offer this benefit. Some providers do not offer this benefit.
Third, you should check with the provider of your precious metal IRA to determine if there are fees for these steps. Extra fees may apply for withdrawals.
Fourth, you should keep track of precious metal IRA investments for at minimum three years after they are sold. For capital gains to be calculated, wait until January 1, each year. Fill out Form 8949 and follow the instructions to calculate how much gain you've realized.
In addition to filing Form8949, you must also notify the IRS about the sale or purchase of precious metals. This step ensures that you pay taxes on all profits earned from your sales.
Finally, consult a trusted accountant or attorney before selling your precious metals. They can help you avoid costly mistakes and ensure you comply with all regulations.
What precious metals do you have that you can invest in for your retirement?
It is important to know what you have already saved and where money you are saving for retirement. Start by listing everything you have. This should include all stocks, bonds, mutual fund, certificates of deposits (CDs), insurance policies, life insurance policies and annuities. To determine how much money is available to invest, add all these items.
If you haven't already done so, you may want to consider opening a Roth IRA account if you're younger than 59 1/2 years old. A Roth IRA is not able to allow contributions to be deducted from your taxable earnings, but a traditional IRA can. However, you won't be able to take tax deductions for future earnings.
You will need another investment account if you decide that you require more money. You can start with a regular brokerage account.
How does an IRA with gold or silver work?
A gold and silver IRA allows you to invest in precious metals, such as gold and silver, without paying taxes on any gains. This makes them an attractive investment for people who want to diversify their portfolios.
If you are older than 59 1/2, interest earned from these account does not attract income tax. The appreciation of the account's value does not trigger capital gains tax. You have to limit the amount you can deposit into this type account. The minimum amount you can put into this account is $10,000. Under 59 1/2 years old, you can't make any investments. Maximum annual contribution: $5,500
Your beneficiaries might not receive the full amount of your account if your death occurs before you retire. After paying all expenses, your assets must be sufficient to cover the remaining balance in your account.
Some banks offer IRA options in gold and silver, while some require you to open a regular brokerage accounts through which you can purchase shares or certificates.
What are the fees associated with an IRA for gold?
The average annual fee to open an individual retirement account (IRA), is $1,000. There are many types and types of IRAs. These include traditional, Roth or SEP-IRAs as well as SIMPLE IRAs. Each type has its own set requirements and rules. If the earnings are not tax-deferred you could be subject to taxes. Also, consider how long the money will be kept. If you have a long-term goal of holding on to your money, you'll be able to save more money if you open a Traditional IRA.
Traditional IRAs allow you to contribute up $5,500 annually ($6,500 if 50+). A Roth IRA lets you contribute unlimited amounts each year. The difference is that a traditional IRA allows you to withdraw your money without having to pay taxes. With a Roth IRA, however, any withdrawals will be subject to taxes.
What is the interest rate on a gold IRA?
It all depends on how much you invest in it. If you have $100,000 then yes. You can't if you have less than $100,000
The amount you deposit into an IRA will affect its potential to earn interest.
If you invest more than $100,000 each year in retirement savings, you may want to open a regular brokerage instead.
There you will earn more interest, but also be exposed to higher risk investments. You don't want your entire portfolio to go bankrupt if the stock markets crash.
A IRA will be more beneficial if you can only contribute $100,000 annually. At least until the market starts growing again.
What are the 3 types of IRA?
There are three main types of IRAs. Each type has its benefits and drawbacks. Below, we'll discuss each one.
Traditional Individual Retirement Account (IRA).
A traditional IRA allows pre-tax money to be contributed to an account. This allows you to earn interest and defer taxes. You can withdraw money from the account tax-free after you retire.
With a Roth IRA, you deposit after-tax dollars into an account, which means any earnings grow tax-free. Withdrawals from the account are also tax-free when you withdraw funds for retirement purposes.
This is similar to a Roth IRA but requires additional contributions from employees. These extra contributions are subject to income tax but any earnings will grow tax-deferred again. When you leave your company, you may convert the entire amount into a Roth IRA.
- The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (monex.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that 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)
- To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (stratatrust.com)
- Same tax rules as traditional IRA SEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less Before setting up a Silver IRA, understand the fees and IRS restrictions. (sltrib.com)
How to transfer your IRA into a gold IRA
So you want to move your retirement savings from a traditional IRA into a gold IRA? This article will assist you in that endeavor. Here are some tips to help you switch.
The process of transferring money out of one type of IRA (traditional) and into another (gold) is called “rolling over.” Rolling an account over offers tax advantages. Others prefer to invest in tangible assets, such as precious metals.
There are two types IRAs: Traditional IRAs or Roth IRAs. The main difference between the two types of IRAs is that Roth IRAs do not allow investors to deduct taxes from their earnings. This means that if a Traditional IRA is invested $5,000 today, it will be able to withdraw $4,850 over five years. You could keep every penny if the same amount was invested in a Roth IRA.
These are the things you need to know if your goal is to convert from a traditional IRA or a gold IRA.
First, you will need to decide whether your current balance should be transferred to a new account. When transferring money, you'll pay income tax at your regular rate on any earnings that exceed $10,000. You can rollover your IRA to avoid paying income tax until you are 59 1/2.
After you have made your decision, you will need to open a new account. You will likely need to show proof of identity, such as a passport, Social Security card, or birth certificate. Once you are done, you will fill out paperwork proving ownership of your IRA. Once you've filled out the forms you'll send them to your bank. You'll be verified and given instructions on where you can send your wire transfers and checks.
Now comes fun. Once your IRS approves your request, you'll deposit cash in your new account. After approval, you'll receive a letter stating that funds can be withdrawn.
That's it! All you need to do now is watch your money grow. Remember that if you are unsure whether you want to convert your IRA, it is possible to close it and roll the balance over into a new IRA.
By: Jamie Redman
Title: Bitcoin's Hands Changing Cycle Indicates Bear Market Recuperation, According to Glassnode's Study
Sourced From: news.bitcoin.com/bitcoin-changing-hands-cycle-signals-bear-market-recovery-glassnode-study-shows/
Published Date: Tue, 17 Oct 2023 19:30:26 +0000