The Potential Approval of an Ethereum ETF Could be the Crypto Asset’s Strongest Narrative, Says Kaiko Research

An analysis conducted by Kaiko Research suggests that the approval of a spot-based ethereum exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) could become the strongest narrative for the crypto asset. Based on the performance of bitcoin after the approval of a spot bitcoin ETF, investors are now betting on the regulator's approval of ether-based ETFs.

Bitcoin's Performance Before the ETF Approval

Kaiko Research's analysis reveals that in the 365 days leading up to the ETF approval, bitcoin outperformed ethereum with a return of 100% compared to ETH's 60%. Bitcoin surged past $48,000 in the weeks and days leading up to the approvals, and there were predictions of its value surpassing $50,000 after the spot ETFs were approved.

ETH's Rally Post-Bitcoin ETF Approvals

Contrary to bitcoin's performance, after the SEC approved 11 spot bitcoin ETFs, the price of BTC started to trend downwards while ethereum's price rallied. This trend suggests that investors are now anticipating that ETH could be the next asset in line for approval.

Investors' Preference for ETH and ETH Beta

The Kaiko Research analysis also highlights investors' preference for tokens related to ethereum, particularly those with higher volatility, known as ETH beta. However, interest in ETH beta has faded post-approval, while ethereum itself has outperformed by falling the least. In fact, during the second week of January, ETH spot volume on centralized exchanges reached its highest level since the FTX collapse, with three of the highest spot volume days recorded since the beginning of 2023.

Spot Volumes Driving ETH's Performance

According to Kaiko's derivatives data, ETH's recent performance has been primarily driven by spot volumes rather than perpetual futures. The report notes that in September and October, futures markets experienced a low point, with aggregated open interest in USD falling by more than 20% from summer levels. During this time, there was little price movement, and funding rates were neutral.

Other Potential Catalysts for ETH's Next Rally

In conclusion, the Kaiko team suggests that while the ETF narrative is more likely to reignite interest in ether, the failure of this approval could lead to other narratives such as new layer twos (L2s) or the success of Eigenn Layer and restaking becoming catalysts for ethereum's next rally.

What are your thoughts on this story? Let us know in the comments section below.

Frequently Asked Questions

Can the government seize your gold?

Because you have it, the government can't take it. You worked hard to earn it. It belongs entirely to you. This rule may not apply to all cases. If you are convicted of fraud against the federal government, your gold can be forfeit. Additionally, your precious metals may be forfeited if you owe the IRS taxes. However, even though your taxes have not been paid, you can still keep your precious metals, even though they are considered the property of United States Government.

Who owns the gold in a Gold IRA?

An individual who has gold is considered to be a “form of money” by the IRS and subject to taxation.

To be eligible for the tax-free status, you must possess at least $10,000 gold and have had it stored for at least five consecutive years.

Gold can be used to protect against inflation and price volatility. However, it is not a good idea to own gold if you don't intend to 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.

A financial planner or accountant should be consulted to discuss your options.

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. An IRA is a great way to save money and not have to pay taxes on the interest you earn. There are some disadvantages to this investment.

You may lose all your accumulated savings if you take too much out of your IRA. The IRS may prevent you from taking out your IRA funds until you reach 59 1/2. If you do withdraw funds from your IRA you will most likely be required to pay a penalty.

You will also need to pay fees for managing your IRA. Most banks charge 0.5% to 2.0% per annum. Other providers charge monthly management fees ranging from $10 to $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. 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 the number of ounces of gold that you can own. 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 offer flexibility for buying gold. They enable you to establish a contract with an 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. However, it does cover damage caused by natural disasters. You might consider purchasing additional coverage if your area is at high risk.

You should also consider the cost of storage for your gold. Storage costs are not covered by insurance. 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 is responsible for keeping track of your investments. They also ensure that you adhere to federal regulations. Custodians are not allowed to sell your assets. Instead, they must hold them as long as you request.

After you have decided on the type of IRA that best suits you, you will need to complete paperwork detailing your goals. You should also include information about your desired investments, such as stocks or bonds, mutual funds, real estate, and mutual funds. Your monthly investment goal should be stated.

After filling out the forms, you'll need to send them to your chosen provider along with a check for a small deposit. After receiving your application, the company will review it and mail you a confirmation letter.

A financial planner is a good idea when opening a gold IRA. Financial planners have extensive knowledge in investing and can help determine the best type of IRA to suit your needs. They can also help you lower your expenses by finding cheaper alternatives to purchasing insurance.

What is the best precious metal to invest in?

The answer to this question depends on how much risk you are willing to take and what type of return you want. Gold has been traditionally considered a haven investment, but it's not always the most profitable choice. For example, if your goal is to make quick money, gold may not suit you. If patience and time are your priorities, silver is the best investment.

If you're not looking to make quick money, gold is probably your best choice. If you want to invest in long-term, steady returns, silver is a better choice.

Should You Buy Gold?

Gold was a safe investment option for those who were in financial turmoil. Many people are now turning their backs on traditional investments like stocks and bonds, and instead look to precious metals like Gold.

While gold prices have been rising in recent years they are still low relative to other commodities, such as silver and oil.

Experts believe this could change soon. They believe gold prices could increase dramatically if there is another global financial crises.

They also noted that gold is growing in popularity because of its perceived value as well as potential return.

These are some things you should consider when considering gold investing.

Consider first whether you will need the money to save for retirement. It is possible to save enough money to retire without investing in gold. That said, gold does provide an additional layer of protection when you reach retirement age.
Second, be sure to understand your obligations before you purchase gold. Each offers varying levels of flexibility and security.
Finally, remember that gold doesn't offer the same level of safety as a bank account. It is possible to lose your gold coins.

Do your research before you buy gold. You should also ensure that you do everything you can to protect your gold.

Do you need to open a Precious Metal IRA

It is essential to be aware of the fact that precious metals do not have insurance coverage before opening an IRA. There is no way to recover money that you have invested in precious metals. All your investments can be lost due to theft, fire or flood.

It is best to invest in physical gold coins and silver coins to avoid this type loss. These items have been around for thousands of years and represent real value that cannot be lost. If you were to offer them for sale today, they would likely fetch you more than you paid when you bought them.

When opening an IRA account, make sure you choose a reputable company offering competitive rates and high-quality products. You should also consider using a third party custodian to protect your assets and give you access at any time.

When you open an account, keep in mind that you won't receive any returns until your retirement. Remember the future.

Statistics

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)
You can only purchase gold bars at least 99.5% purity. (forbes.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)
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)
If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)

External Links

How To

Tips for Investing In Gold

One of the most sought-after investment strategies is investing in gold. There are many benefits to investing in gold. There are many options for investing in gold. Some people buy physical gold coins, while others prefer investing in gold ETFs (Exchange Traded Funds).

Before buying any type gold, it is important to think about these things.

First, make sure you check if your country allows you own gold. If the answer is yes, you can go ahead. You might also consider buying gold in foreign countries.
You should also know the type of gold coin that you desire. You can go for yellow gold, white gold, rose gold, etc.
The third factor to consider is the price for gold. It is better to start small, and then work your way up. It is important to diversify your portfolio whenever you purchase gold. Diversifying your portfolio should be a priority, including stocks, bonds and real estate.
Last but not least, remember that gold prices fluctuate frequently. It is important to stay up-to-date with the latest trends.

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By: Terence Zimwara
Title: The Potential Approval of an Ethereum ETF Could be the Crypto Asset's Strongest Narrative, Says Kaiko Research
Sourced From: news.bitcoin.com/study-potential-approval-of-spot-etf-is-ethereums-strongest-narrative-right-now/
Published Date: Mon, 22 Jan 2024 13:00:59 +0000