The Surge in Demand for US Spot Bitcoin ETFs and Impending Halving

Rising Demand for Bitcoin ETFs

The demand for US spot Bitcoin ETFs surged significantly on Tuesday, surpassing the new supply created daily by miners by a remarkable 614%, according to Gayatri Choudry, Quantitative Research Analyst at Bitwise Asset Management.

Growing Interest Among Investors

This surge in demand for Bitcoin ETFs reflects a growing interest among institutional and retail investors in gaining exposure to the digital asset without the need to manage the BTC themselves. ETFs provide a convenient and regulated way for investors to participate in the potential upside of Bitcoin's price movements while reducing some of the risks associated with direct ownership and custody.

Impact of Bitcoin Halving

The Bitcoin halving, set to happen in less than a month, will reduce the block reward from 6.25 BTC to 3.125 BTC. This event is significant as it cuts the rate at which new bitcoin is generated in half, increasing the scarcity of BTC over time. With the rising demand for Bitcoin ETFs outpacing new supply, the availability of bitcoin in the market is becoming increasingly scarce.

Catalysts for Price Surge

The combination of the growing demand for Bitcoin ETFs and the upcoming Bitcoin halving has been the driving force behind the surge in Bitcoin's price this year. BTC is currently up over 55% year-to-date. Since BlackRock first filed its spot Bitcoin ETF application with the US Securities and Exchange Commission, BTC has seen a rise of over 173%.

Anticipation for Market Reaction

Market participants are eagerly awaiting to see how Bitcoin will respond to the impending halving. This market cycle is unique as it marks the first time in Bitcoin's history that its price has hit a new all-time high before the halving. Historically, it took a few months for a 'supply shock' to trigger an increase in Bitcoin's price post-halving. However, with the relentless growth in demand from spot Bitcoin ETFs, Bitcoin has already experienced a significant supply shock, and the new daily supply of BTC is about to be halved.

Frequently Asked Questions

Can I hold physical gold in my IRA?

Gold is money, not just paper currency or coinage. It’s an asset that people have used for thousands of years as a store of value, a way to keep wealth safe from inflation and economic uncertainty. Today, investors invest in gold as part a diversified portfolio. This is because gold tends do better in financial turmoil.

Many Americans today prefer to invest in precious metals, such as silver and gold, over stocks and bonds. It is possible to make money by investing in gold. However, it doesn’t guarantee that you’ll make a lot of money.

Another reason is the fact that gold historically has performed better than other assets in times of financial panic. The S&P 500 declined 21 percent during the same period. Gold prices increased nearly 100 per cent between August 2011 – early 2013. Gold was one of the few assets that performed better than stocks during turbulent market conditions.

Another advantage of investing in gold is that it’s one of the few assets with virtually zero counterparty risk. Your shares will still be yours even if your stock portfolio drops. If you have gold, it will still be worth your shares even if the company in which you invested defaults on its debt.

Finally, gold is liquid. This allows you to sell your gold whenever you want, unlike many other investments. Because gold is so liquid compared to other investments, buying it in small amounts makes sense. This allows you to take advantage of short-term fluctuations in the gold market.

Is the government allowed to take your gold

Your gold is yours and the government cannot take it. You earned it through hard work. 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. You can keep your gold even if your taxes are not paid.

What are the benefits of a gold IRA

Many benefits come with a gold IRA. It can be used to diversify portfolios and is an investment vehicle. You decide how much money is put in each account and when it is withdrawn.

You have the option of rolling over funds from other retirement account into a gold IRA. This allows you to easily transition if your retirement is early.

The best part about gold IRAs? You don’t have to be an expert. They are offered by most banks and brokerage companies. You do not need to worry about fees and penalties when you withdraw money.

There are also drawbacks. Gold has historically been volatile. It’s important to understand the reasons you’re considering investing in gold. Are you looking for safety or growth? Do you want to use it as an insurance strategy or for long-term growth? Only once you know, that will you be able to make an informed decision.

If you plan to keep your gold IRA indefinitely, you’ll probably want to consider buying more than one ounce of gold. One ounce won’t be enough to meet all your needs. Depending upon what you plan to do, you could need several ounces.

If you’re planning to sell off your gold, you don’t necessarily need a large amount. You can even manage with one ounce. However, you will not be able buy any other items with those funds.

How much money should my Roth IRA be funded?

Roth IRAs let you save tax on retirement by allowing you to deposit your own money. These accounts are not allowed to be withdrawn before the age of 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. First, you can’t touch your principal (the initial amount that was deposited). This means that no matter how much you contribute, you can never take out more than what was initially contributed to this account. If you wish to withdraw more than you originally contributed, you will have to pay taxes.

The second rule states that income taxes must be paid before you can withdraw earnings. Also, taxes will be due on any earnings you take. For example, let’s say that you contribute $5,000 to your Roth IRA every year. Let’s further assume you earn $10,000 annually after contributing. The federal income tax on your earnings would amount to $3,500. The remaining $6,500 is yours. This is the maximum amount you can withdraw because you are limited to what you initially contributed.

Therefore, even if you take $4,000 out of your earnings you still owe taxes on $1,500. On top of that, you’d lose half of the earnings you had taken out because they would be taxed again at 50% (half of 40%). You only got back $4,000. Even though you were able to withdraw $7,000 from your Roth IRA,

There are two types of Roth IRAs: Traditional and Roth. 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. There are no restrictions on the amount you can withdraw from a Traditional IRA.

Roth IRAs do not allow you to deduct your contributions. Once you are retired, however, you may withdraw all of your contributions plus accrued interest. There is no minimum withdrawal required, unlike a traditional IRA. Your contribution can be withdrawn at any age, not just when you reach 70 1/2.

Statistics

  • 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)
  • Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
  • 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)

External Links

wsj.com

law.cornell.edu

irs.gov

bbb.org

How To

The History of Gold as an Asset

From the beginning of history, gold was a popular currency. It was universally accepted and loved for its beauty, durability, purity and divisibility. Aside from its inherent value, it could be traded internationally. However, since there were no international standards for measuring gold at this point, different weights and measures existed worldwide. One pound sterling in England was equivalent to 24 carats silver, while one livre tournois in France was equal 25 carats. In Germany, one mark was equivalent to 28 carats.

In the 1860s the United States began issuing American currency made up 90% copper (10% zinc) and 0.942 gold (0.942 pure). The result was a decrease in foreign currency demand, which led to an increase in their price. The price of gold dropped because the United States began to mint large quantities of gold coins. Due to the excessive amount of money flowing into the United States, they had to find a way for them to repay some of their debt. To do so, they decided to sell some of the excess gold back to Europe.

Most European countries distrusted the U.S. Dollar and began to accept gold as payment. Many European countries began to use paper money and stopped accepting gold as payment after World War I. Since then, the price of gold has increased significantly. Even though the price of gold fluctuates, it remains one the best investments you can make.

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By: Nik Hoffman
Title: The Surge in Demand for US Spot Bitcoin ETFs and Impending Halving
Sourced From: bitcoinmagazine.com/markets/bitcoin-etf-demand-surges-outpacing-supply-by-600
Published Date: Wed, 27 Mar 2024 18:49:09 GMT

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