JPMorgan's Analysis on Bitcoin
JPMorgan, a global investment bank, has stated that the downward pressure on Bitcoin caused by profit-taking from Grayscale's bitcoin trust (GBTC) has mostly occurred. The bank's analyst explains that this indicates that the negative impact on Bitcoin from this source is likely to be diminishing.
JPMorgan's Bitcoin Price Forecast
JPMorgan once again commented on the cryptocurrency market this week, following a significant drop in the price of Bitcoin. The price fell from above $47K prior to the approval of the spot Bitcoin exchange-traded funds (ETFs), to below $39K.
This decline in Bitcoin's price coincided with substantial outflows from Grayscale's bitcoin trust (GBTC), which transitioned into a spot Bitcoin ETF after receiving approval from the U.S. Securities and Exchange Commission (SEC) on January 10. Since January 12, GBTC's Bitcoin holdings have decreased by 114,367.39 BTC, equivalent to $4.77 billion based on the Bitcoin exchange rates as of January 27.
JPMorgan strategist, Nikolaos Panigirtzoglou, stated on Thursday that "given $4.3b has come out already from GBTC, we conclude that GBTC profit-taking has largely occurred." The analyst further added:
"This would imply that most of the downward pressure on Bitcoin from that channel should be largely behind us."
Panigirtzoglou had previously predicted that $3 billion would be withdrawn from GBTC, building on his earlier estimate that up to $3 billion had been invested into GBTC in the secondary market throughout 2023 to take advantage of the discount to NAV. He explained that as this $3 billion exits the Bitcoin space through GBTC profit-taking, Bitcoin's price would face downward pressure.
Sharing a similar perspective, John Todaro from Needham stated in a note that Thursday "registered one of the lowest days in net outflows from GBTC and the third consecutive day of declining outflows, which could indicate the beginning of a slowdown in redemptions." He emphasized that "while it has been difficult to quantify how much more should come out of GBTC, we believe two of the largest drivers of selling – outflows driven by the FTX estate and arbitrage funds – are nearly done."
Another JPMorgan analyst, Kenneth Worthington, commented this week that "we think the catalyst in Bitcoin ETFs that has pushed the ecosystem out of its winter will disappoint market participants." As a result, the investment bank downgraded Coinbase stock (Nasdaq: COIN) from Neutral to Underweight.
What are your thoughts on JPMorgan analyst Nikolaos Panigirtzoglou's prediction about the price of Bitcoin? Let us know in the comments section below.
Frequently Asked Questions
How does gold perform as an investment?
Gold's price fluctuates depending on the supply and demand. It is also affected by interest rates.
Gold prices are volatile due to their limited supply. Additionally, physical gold can be volatile because it must be stored somewhere.
How Much of Your IRA Should Be Made Up Of Precious Metals
The most important thing you should know when investing in precious metals is that they are not just for wealthy people. You don't need to be rich to make an investment in precious metals. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. It is possible to also purchase shares in companies that make precious metals. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
You'll still get the benefit of precious metals no matter which country you live in. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
They also tend to appreciate over time, unlike traditional investments. You'll probably make more money if your investment is sold down the line than traditional investments.
Is buying gold a good retirement plan?
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.
Physical bullion bar is the best way to invest in precious metals. However, there are many other ways to invest in gold. It is best to research all options and make informed decisions based on your goals.
If you don't want to keep your wealth safe, buying shares in companies that extract gold and mining equipment could be a better choice. If you need cash flow to finance your investment, then gold stocks could be a good option.
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 can include stocks of precious metals refiners and gold miners.
What are the pros and cons of a gold IRA?
An Individual Retirement Account (IRA), unlike regular savings accounts, doesn't require you to pay tax on interest earned. 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. This type of investment has its downsides.
To give an example, if your IRA is withdrawn too often, you can lose all your accumulated funds. 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. Many banks charge between 0.5% and 2.0% per year. Other providers charge monthly management costs ranging from $10-50.
You can purchase insurance if you want to keep your money out of a bank. A majority of insurance companies require that you possess a minimum amount gold to be eligible for a claim. 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 how many ounces you can keep. Others let you choose your weight.
It's also important to decide whether or not to buy gold futures contracts. Physical gold is more costly than gold futures. Futures contracts allow you to buy gold with more flexibility. 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 doesn't include theft protection or loss due to fire, flood, or earthquake. It does include coverage for damage due to natural disasters. You may consider adding additional coverage if you live in an area at high risk.
Apart from insurance, you should consider the costs of storing your precious metals. Storage costs are not covered by insurance. Banks charge between $25 and $40 per month for safekeeping.
To open a IRA in gold, you will need to first speak with a qualified custodian. A custodian helps you keep track of your investments, and ensures compliance with federal regulations. Custodians don't have the right to sell assets. Instead, they must retain them for as long and as you require.
Once you have chosen the right type of IRA to suit your needs, it is time to fill out paperwork defining your goals. Information about your investments such as stocks and bonds, mutual fund, or real property should be included in your plan. Also, you should specify how much each month you plan to invest.
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 review your application and send you a confirmation letter.
Consider consulting a financial advisor when opening a golden IRA. A financial planner is an expert in investing and can help you choose the right type of IRA for you. You can also reduce your insurance costs by working with them to find lower-cost alternatives.
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so 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)
- 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)
- 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)
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- Do you want to keep your IRA gold at home? It's not exactly legal – WSJ
Three ways to invest in gold for retirement
It's essential to understand how gold fits into your retirement plan. There are many ways to invest in gold if you have a 401k account at work. You might also be interested to invest in gold outside the workplace. For example, if you own an IRA (Individual Retirement Account), you could open a custodial account at a brokerage firm such as Fidelity Investments. You might also consider purchasing precious metals directly from a trusted dealer if they are not already yours.
These are the three rules to follow if you decide to invest in gold.
- Buy Gold with Your Money – You don't need credit cards, or to borrow money to finance your investments. Instead, put cash into your accounts. This will help to keep your purchasing power high and protect you against inflation.
- Own Physical Gold Coins – You should buy physical gold coins rather than just owning a paper certificate. Physical gold coins are easier to sell than certificates. There are no storage fees for physical gold coins.
- Diversify Your Portfolio. Never place all your eggs in the same basket. This is how you spread your wealth. You can invest in different assets. This helps reduce risk and gives you more flexibility during market volatility.
By: Kevin Helms
Title: JPMorgan Predicts Relief for Bitcoin as Grayscale Profit-Taking Subsides
Sourced From: news.bitcoin.com/jpmorgan-sees-downward-pressure-easing-for-bitcoin-as-grayscale-profit-taking-fades/
Published Date: Sun, 28 Jan 2024 00:30:17 +0000