The Potential Impact of Spot Bitcoin ETFs
Cryptocurrency exchange Coinbase has expressed its belief that spot bitcoin exchange-traded funds (ETFs) could have a significant positive impact on the total crypto market cap. According to Coinbase, the chances of the U.S. Securities and Exchange Commission (SEC) approving one or more spot bitcoin ETFs before the end of the fourth quarter in 2023 have greatly increased.
Coinbase's Spot Bitcoin ETF Prediction
Coinbase Institutional, a division of the popular crypto exchange Coinbase (Nasdaq: COIN) that caters to institutional investors, recently released its November Monthly Outlook titled "Why an ETF Matters." In this report, David Duong, Head of Institutional Research at Coinbase, emphasized that spot bitcoin ETFs have the potential to bring BTC further into the mainstream, making it accessible to millions of investors through broker-dealer, RIA, and tax-advantaged account structures. Duong also stated that spot bitcoin ETFs could contribute billions of dollars to the overall crypto market cap and create new investment opportunities for the asset class.
The Significance of Spot Bitcoin ETF Approvals
According to Coinbase, the approval of one or more spot bitcoin ETFs would have a significant impact by opening up a massive opportunity for the wealth management community. This community handles over a third of all wealth in the U.S. Coinbase believes that ETFs can also pave the way for new financial products such as lending and derivatives.
The Coinbase report explains that the chances of the SEC approving one or more spot bitcoin ETFs have significantly improved, with the potential for approval before the end of the fourth quarter in 2023. However, the current timeline has been complicated by gridlock in the U.S. House of Representatives. If a government shutdown occurs on November 17, over 90% of SEC staff would be furloughed. Despite this, Coinbase believes there is currently an open window for the SEC to proactively approve ETFs before a possible shutdown.
Coinbase also highlights the fact that several applicants have recently amended their prospectuses with updated language, indicating meaningful dialogue between these applicants and the SEC. While this is a common occurrence in other asset classes, it is a first for the crypto industry, according to Coinbase.
Do You Agree?
Coinbase's prediction that spot bitcoin ETFs will significantly boost the crypto market cap raises an important question. Do you agree with Coinbase's assessment that spot bitcoin ETFs will add billions to the market cap, and do you believe that the SEC will approve some applications this year? Let us know your thoughts in the comments section below.
Frequently Asked Questions
Is buying gold a good way to save money for retirement?
Although it may not look appealing at first, buying gold for investment is worth considering when you consider the global average gold consumption per year.
The most popular form of investing in gold is through physical bullion bars. You can also invest in gold in other ways. It’s best to thoroughly research all options before you make a decision.
If you don’t need a safe place for your wealth, then buying shares of mining companies or companies that extract it might be a better alternative. If you are looking for cash flow from your investment, buying gold stocks will work well.
You can also invest your money in exchange-traded fund (ETFs), which give you exposure to the gold price by holding securities related to gold. These ETFs may include stocks that are owned by gold miners or precious metals refining companies as well as commodity trading firms.
How to Open a Precious Metal IRA?
The first step is to decide if you want an Individual Retirement Account (IRA). To open the account, complete Form 8606. You will then need to complete Form 5204 in order to determine which type IRA you are eligible. This form should be completed within 60 days after opening the account. Once you have completed this form, it is possible to begin investing. You can also contribute directly to your paycheck via payroll deduction.
Complete Form 8903 if your Roth IRA option is chosen. The process for an ordinary IRA will not be affected.
To qualify for a precious-metals IRA, you’ll need to meet some requirements. The IRS says you must be 18 years old and have earned income. You can’t earn more than $110,000 per annum ($220,000 in married filing jointly) for any given tax year. You must also contribute regularly. These rules apply regardless of whether you are contributing directly to your paychecks or through your employer.
An IRA for precious metals allows you to invest in gold and silver as well as platinum, rhodium, and even platinum. You can only purchase bullion in physical form. You won’t have the ability to trade stocks or bonds.
To invest directly in precious metals companies, you can also use precious metals IRA. This option can be provided by some IRA companies.
However, there are two significant drawbacks to investing in precious metals via an IRA. First, they are not as liquid or as easy to sell as stocks and bonds. They are therefore more difficult to sell when necessary. They also don’t pay dividends, like stocks and bonds. You’ll lose your money over time, rather than making it.
What precious metal should I invest in?
The answer to this question depends on how much risk you are willing to take and what type of return you want. Although gold has been considered a safe investment, it is not always the most lucrative. You might not want to invest in gold if you’re looking for quick returns. You should invest in silver if you have the patience and time.
If you don’t care about getting rich quickly, gold is probably the way to go. However, silver might be a better option if you’re looking for an investment that provides steady returns over long periods.
What are the pros and disadvantages of a gold IRA
An Individual Retirement Account (IRA), unlike regular savings accounts, doesn’t require you to pay tax on interest earned. An IRA is a great way to save money and not have to pay taxes on the interest you earn. This type of investment has its downsides.
If you withdraw too many funds from your IRA at once, you may lose all your accumulated assets. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. If you do withdraw funds, you’ll need to pay a penalty.
Another disadvantage is that you must pay fees to manage your IRA. Most banks charge 0.5% to 2.0% per annum. Other providers charge monthly management fees ranging from $10 to $50.
If you prefer to keep your money outside a bank, you’ll need to purchase insurance. Insurance companies will usually require that you have at least $500,000. Some insurers may require you to have insurance that covers losses up $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 amount of gold that you are allowed to own. Some providers allow you to choose your weight.
It is also up to you to decide whether you want to purchase physical gold or futures. Futures contracts for gold are less expensive than physical gold. However, futures contracts give you flexibility when buying gold. Futures contracts allow you to create a contract with a specified expiration date.
You will also have to decide which type of insurance coverage is best for you. The standard policy does not include theft protection or loss caused by fire, flood, earthquake. The policy does not cover natural disasters. If you live in a high-risk area, you may want to add additional coverage.
Additional to your insurance, you will need to consider how much it costs to store your gold. Insurance won’t cover storage costs. Safekeeping costs can be as high as $25-40 per month at most banks.
If you decide to open a gold IRA, you must first contact a qualified custodian. A custodian maintains track of all your investments and ensures you are in compliance with federal regulations. Custodians can’t sell assets. Instead, they must retain them for as long and as you require.
Once you’ve chosen the best type of IRA for you, you need to fill in paperwork describing your goals. You should also include information about your desired investments, such as stocks or bonds, mutual funds, real estate, and mutual funds. It is also important to specify how much money you will invest each month.
You will need to fill out the forms and send them to your chosen provider together with a check for small deposits. 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. Financial planners are experts in investing and will help you decide which type of IRA works best for your situation. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
How much gold should you have in your portfolio?
The amount you make will depend on the amount of capital you have. For a small start, $5k to $10k is a good range. You could then rent out desks and office space as your business grows. So you don’t have all the hassle of paying rent. It’s only one monthly payment.
It’s also important to determine what type business you’ll run. My website design company charges clients $1000-2000 per month depending on the order. Consider how much you expect to make from each client, if you decide to do this kinda thing.
You won’t get a monthly paycheck if you work freelance. This is because freelancers are paid. You may get paid just once every 6 months.
You need to determine what kind or income you want before you decide how much of it you will need.
I recommend starting with $1k-$2k of gold and growing from there.
Statistics
- 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)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- If you take distributions before hitting 59.5, you’ll owe a 10% penalty on the amount withdrawn. (lendedu.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)
