JPMorgan Warns of Additional Outflow from Grayscale’s Bitcoin Fund, Putting Pressure on Bitcoin Prices

JPMorgan Analyst Shares Bitcoin Price Outlook

Global investment bank JPMorgan has issued a warning regarding the potential for additional outflow from Grayscale's bitcoin fund. The bank's analyst, Nikolaos Panigirtzoglou, has cautioned that this outflow could exert further pressure on bitcoin prices in the coming weeks. Panigirtzoglou also highlighted the impact of the recent launch of spot bitcoin exchange-traded funds (ETFs) and how it has led to a rotation of funds from existing bitcoin vehicles.

Profit Taking and Bitcoin's Price Decline

Panigirtzoglou noted that the bitcoin price has experienced a decline of over 10% since the launch of spot bitcoin ETFs. He attributed this decline to profit taking, where investors buy the rumor and sell the fact. The price of BTC initially rose above $47,000 in anticipation of the spot bitcoin ETF approval, but subsequently dropped after the approval. As of now, the cryptocurrency is trading at $41,697.

Outflow from Grayscale's Bitcoin Fund

The JPMorgan analyst pointed out that there has been a significant outflow of funds from Grayscale's bitcoin fund, particularly $1.5 billion. He explained that investors who had been buying the GBTC fund at a discount to NAV in anticipation of its eventual ETF conversion are now taking full profit by exiting the bitcoin space entirely. This behavior has not resulted in a shift to cheaper spot bitcoin ETFs.

Potential Impact on Bitcoin Prices

Panigirtzoglou estimated that up to $3 billion had been invested in GBTC in the secondary market during 2023. With $1.5 billion already exiting the bitcoin space, there could be an additional $1.5 billion that may exit via profit taking on GBTC. This could further put pressure on bitcoin prices in the coming weeks.

Inflow into Other Spot Bitcoin ETFs

Panigirtzoglou also analyzed the inflow into other spot bitcoin ETFs that launched recently, such as Blackrock's Ishares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin Fund (FBTC). He highlighted that these ETFs saw a combined inflow of $3 billion within just four days. This inflow mainly reflects a rotation of funds from existing bitcoin vehicles like futures-based bitcoin ETFs or retail investors shifting from digital wallets held with exchanges/retail brokers to cheaper spot bitcoin ETFs.

In conclusion, JPMorgan's warning of additional outflow from Grayscale's bitcoin fund and the potential pressure it may exert on bitcoin prices highlights the impact of recent spot bitcoin ETF launches. The market dynamics, including profit taking and the rotation of funds, will continue to shape the cryptocurrency landscape.

Frequently Asked Questions

How to Open a Precious Metal IRA?

First, decide if an Individual Retirement Account is right for you. Open the account by filling out Form 8606. For you to determine the type and eligibility for which IRA, you need Form 5204. This form should be completed within 60 days after opening the account. You can then start investing once you have this completed. You might also be able to contribute directly from the paycheck through payroll deduction.

To get a Roth IRA, complete Form 8903. Otherwise, the process will look identical to an existing IRA.

To qualify for a precious Metals IRA, there are specific requirements. The IRS states that you must be at least 18 and have earned income. Your earnings cannot exceed $110,000 per year ($220,000 if married and filing jointly) for any single tax year. Contributions must be made on a regular basis. These rules will apply regardless of whether your contributions are made through an employer or directly out of your paychecks.

You can invest in precious metals IRAs to buy gold, palladium and platinum. You can only purchase bullion in physical form. This means you won't be allowed to trade shares of stock or bonds.

You can also use your precious metals IRA to invest directly in companies that deal in precious metals. Some IRA providers offer this option.

There are two major drawbacks to investing via an IRA in precious metals. 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 don't yield dividends like bonds and stocks. Therefore, you will lose money over time and not gain it.

How much should I contribute to my Roth IRA account?

Roth IRAs allow you to deposit your money tax-free. You can't withdraw money from these accounts before you reach the age of 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. You cannot withdraw more than the original amount you contributed. If you are able to take out more that what you have initially contributed, you must pay taxes.

The second rule is that you cannot withdraw your earnings without paying income taxes. 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 also assume that you make $10,000 per year from your Roth IRA contributions. On the earnings, you would be responsible for $3,500 federal income taxes. The remaining $6,500 is yours. Since you're limited to taking out only what you initially contributed, that's all you could take out.

If you took $4,000 from your earnings, you would still owe taxes for the $1,500 remaining. Additionally, half of your earnings would be lost because they will be taxed at 50% (half the 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.

There are two types if Roth IRAs, Roth and Traditional. Traditional IRAs allow for pre-tax deductions from your taxable earnings. Your traditional IRA can be used to withdraw your balance and interest when you are retired. You have the option to withdraw any amount from a traditional IRA.

Roth IRAs are not allowed to allow you deductions for contributions. You can withdraw your entire contribution, plus accrued interests, after you retire. There is no minimum withdrawal limit, unlike traditional IRAs. Your contribution can be withdrawn at any age, not just when you reach 70 1/2.

Who owns the gold in a Gold IRA?

The IRS considers gold owned by an individual to be “a type of money” and is subject taxation.

You must have at least $10,000 in gold and keep it for at most five years to qualify for this tax-free status.

While gold may be a great investment to help prevent inflation and volatility in the market, it's not wise to keep it if you won't use it.

You will need to declare the value of gold if you intend on selling it one day. This could impact how capital gains taxes you owe for cash investments.

You should consult a financial planner or accountant to see what options are available to you.

What is the best precious-metal to invest?

This question depends on how risky you are willing to take, and what return you want. Gold has been traditionally considered a haven investment, but it's not always the most profitable choice. You might not want to invest in gold if you're looking for quick returns. If patience and time are your priorities, silver is the best investment.

Gold is the best investment if you aren't looking to get rich quick. Silver might be a better investment option if steady returns are desired over a long period of time.

What precious metals can you invest in for retirement?

It is gold and silver that are the best precious metal investment. They are both easy to trade and have been around for years. They are a great way to diversify your portfolio.

Gold: Gold is one the oldest forms currency known to man. It's also very safe and stable. It is a good way for wealth preservation during uncertain times.

Silver: Silver has been a favorite among investors for years. It's an ideal choice for those who prefer to avoid volatility. Silver tends instead to go up than down, which is unlike gold.

Platinium is another precious metal that is becoming increasingly popular. It is very durable and resistant against corrosion, much like silver and gold. It is however more expensive than its counterparts.

Rhodium – Rhodium is used to make catalytic conversions. It is also used to make jewelry. It is also very affordable in comparison to other types.

Palladium: Palladium is similar to platinum, but it's less rare. It's also less expensive. This is why it has become a favourite among investors looking for precious metals.

What are the pros & con's of a golden IRA?

An Individual Retirement Account is a more beneficial option than regular savings accounts. You don't 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. 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 decide to withdraw funds from your IRA, you'll likely need to pay a penalty fee.

The downside is that managing your IRA requires fees. Many banks charge between 0.5%-2.0% per year. Other providers may charge monthly management fees, ranging between $10 and $50.

Insurance will be required if you would like to keep your cash out of banks. Many insurers require that you own at least one ounce of gold before you can make a claim. It is possible that you will be required to purchase insurance that covers losses of up to $500,000.

If you choose to go with a gold IRA, you'll need to determine how much gold you want to use. Some providers limit how many ounces you can keep. Others allow you to pick your weight.

It's also important to decide whether or not to buy gold futures contracts. Futures contracts for gold are less expensive than physical gold. However, futures contracts give you flexibility when buying gold. You can set up futures contracts with a fixed expiration date.

You will also have to decide which type of insurance coverage is best for you. 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. Additional coverage may be necessary if you reside in high-risk areas.

Additional to your insurance, you will need to consider how much it costs to store your gold. Storage costs will not be covered by insurance. For safekeeping, banks typically charge $25-40 per month.

If you decide to open a gold IRA, you must first contact a qualified custodian. A custodian helps you keep track of your investments, and ensures compliance with federal regulations. Custodians aren't allowed to sell your assets. Instead, they must maintain them for as long a time as you request.

After you've determined which type of IRA is best for you, fill out the paperwork indicating your goals. You must include information about what investments you would like to make (e.g. stocks, bonds and mutual funds). It is also important to specify how much money you will invest each month.

After completing the forms, send them along with a check or a small deposit to your chosen provider. The company will then review your application and mail you a letter of confirmation.

When opening a gold IRA, you should consider using a financial planner. A financial planner is an expert in investing and can help you choose the right type of IRA for you. They can help you find cheaper insurance options to lower your costs.

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)
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)
(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)
If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)

External Links

How To

Online buying gold and silver is the best way to purchase it.

To buy gold, you must first understand how it works. It is a precious metal that is very similar to platinum. It is rare and used as money due to its durability and resistance against corrosion. It's hard to use, so most people prefer buying jewelry made out of it to actual bars of gold.

There are two types today of gold coins. One is legal tender while the other is bullion. Legal tender coins are those that are intended for circulation in a country. They typically have denominations of $1, $5 or $10.

Bullion coin are not intended for investment. However, their value will increase with inflation.

They can't be exchanged in currency exchange systems. One example is that if someone buys $100 worth gold, they get 100 grams with a $100 value. Every dollar spent on gold purchases, the buyer receives one gram of gold.

When looking to buy precious metals, the next thing you should be aware of is where it can be purchased. There are several options available if your goal is to purchase gold from a dealer. First, go to your local coin shop. You can also try going through a reputable website like eBay. You might also consider buying gold from an online private seller.

Private sellers are individuals who offer to sell gold at retail or wholesale prices. Private sellers charge a 10% to 15% commission per transaction. Private sellers will typically get you less than a coin shop, eBay or other online retailers. This is a great option for gold investing because you have more control over the item’s price.

The other option is to purchase physical gold. You can store physical gold much more easily than you can with paper certificates. However, it still needs to be safe. You need to make sure that your physical gold is safe by storing it in an impenetrable container like a vault or safety depositbox.

If you are looking to purchase gold on your own, you have two options: a bank or an pawnshop. A bank will be able to provide you with a loan for the amount of money you want to invest in gold. Customers can borrow money from pawnshops to purchase items. Banks often charge higher interest rates then pawnshops.

Another way to purchase gold is to ask another person to do it. Selling gold can also be done easily. A company such as GoldMoney.com can help you set up a simple bank account and get paid immediately.

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By: Kevin Helms
Title: JPMorgan Warns of Additional Outflow from Grayscale's Bitcoin Fund, Putting Pressure on Bitcoin Prices
Sourced From: news.bitcoin.com/jpmorgan-warns-of-incoming-bitcoin-selloff-with-anticipated-3-billion-grayscale-outflow/
Published Date: Mon, 22 Jan 2024 01:00:46 +0000