Bitcoin finds a new home on Wall Street

Hola folks!

Hope you guys enjoyed the week gone by and what a week it has been. The much-awaited Spot Bitcoin ETFs are now a reality! Bitcoin has found a new home on Wall Street. The Bitcoin ETF approval set the market speculating on Ethereum ETF approval, fueling an ETH rally! 

On the economic front, India and the US both saw a rise in inflation for December. For the US, December inflation rose by 0.3%, taking the annual inflation to 3.4%. India’s retail inflation rose to 5.69 percent for the month. While the inflation numbers are a little disappointing, the Indian equity market got a boost from the quarterly financial results of IT firms like Infosys, TCS, and Wipro as the performance was in line with analyst estimates.

Let’s dive deep into the newsletter to read in detail about the BTC ETF approval and learn more about personal finance and retirement planning. As usual, we will end the read with a book recommendation and a fun crypto crossword.

Are you new to the world of mutual fund investments? The confusion around debt and equity mutual funds is probably holding you back from investing in mutual funds. If this is the case we have your back. In the video below, we break down the differences between debt and equity mutual funds, helping you make a well-informed investment decision.

Click on the link below to learn more about the workings of debt and equity mutual funds and the potential benefits and risks associated with them. 

Wealth creation is a continuous process. The aim of wealth creation is a retirement plan that will create a corpus big enough to see you through your retirement years. Read the segment below to get guidance on your retirement plan.

Portfolio Building in your 20s and 30s - Part 8

You are in your 20s or your 30s and retirement might seem decades away. But a retirement plan is a process to form your retirement aims, calculate the money you might need, and invest the right way to boost your savings.

Your retirement is a fresh start to life. You might not want to start this process in your advanced years when you are faced with liquidity crunch and little savings. 

Here are the factors you should consider while planning your retirement corpus: 

• Psychological myopia

The problems of the present will always supersede the problems of the future. Your current resources might not seem enough to save for your retirement, but the art here is to optimize your resources and rationalize your expenses in a way that you end up saving a portion of your income for your retirement plan.  

• Life expectancy

Most of us are going to live longer than our grandparents and parents did. The longer life expectancy comes with a caveat; the longer you live, the more money you will need as your retirement or non-productive years will be longer.  

• Retirement age

This question is very subjective and personal. This is because some of you might want to work longer while others might want to opt for an early retirement. But realistically speaking, the longer you live, the longer you will work. This can prove beneficial for your retirement investments. More people are opting to push retirement to a later date so that they can earn more and for longer.

At times, this push is fueled by insufficient funds and people would want to work to keep themselves occupied. If done well, retirement planning can allow you to quit work much before others.

• Rising healthcare costs

The healthcare costs are rising and the longer you live, the more you will have to spend on healthcare. This will play an important role in your retirement plan as you will have to provide a considerable portion of your corpus towards healthcare costs. 

• Calculate your current investments and debts 

You must consider all your current investments and long-term debts while calculating your retirement corpus. 

You can take the help of an online retirement calculator to estimate your retirement corpus. 

• Return on investment

Your investment will grow at the rate of return a particular product or asset is earning for a fixed period. Even a tiny difference in the rate of return on your investments can have a magnified effect at the time of your retirement. So be sure to ascertain your risk-taking ability and opt for the investment that adds the most value to your funds.

While we all anticipate the day we say goodbye to our work and retire, we fail to plan for one of the most anticipated events of our lives well in advance. If you find the world to be expensive today, retirement will be even more expensive as you will generate very little income and spend almost the same amount of money as before. 

Therefore, planning for retirement is a must for all of us. In the coming few days work on estimating your retirement corpus requirements. Be warned that it will be a huge number, so don't get shocked. We will highlight how you can achieve the seemingly extravagant number with regular investments. 

Crypto markets had a week of heightened volatility as the spot BTC ETF approval drama reached its crescendo. To everyone's surprise, the official X account of the SEC was hacked and fake approval news was tweeted, sending markets into an upward tizzy and BTC shooting past $47k. However, within an hour, the SEC clarified that the approvals hadn't come through resulting in a steep correction and BTC price back around $45k. 

The very next day the actual approvals came through as 11 Spot BTC ETFs went live on Thursday for the first time. With a record $4.6 billion in trading volume on the first day, this marked the most successful ETF launch for a new asset class. BTC price was on the rise, reaching a 22-month high of almost $49k after which the news of Vanguard and other major asset managers blocking access for their clients to these ETFs went viral. This resulted in sharp selling pressure (mostly from GBTC selling) sending BTC prices lower. The selling in GBTC is expected to continue as users rotate from the 1.5% fee product to other lower-priced offerings. BTC price is much lower now, trading around $42.5k as investors still evaluate the incoming demand from institutions.

Amid the frenzy surrounding the BTC ETF approval, investor focus also shifted back to Ethereum's ETH as Blackrock and others have also filed for a spot ETH ETF approval, which has a July deadline. After months of underperforming BTC, ETH outpaced the price returns last week, jumping by over 12%. Even Ethereum's fork Ethereum Classic or ETC surged in price as investors have rekindled hope for the token to be classified as a commodity and a subsequent ETF product. Similar price rallies were also witnessed in Bitcoin's fork, Bitcoin Cash (BCH), and "Digital Silver" Litecoin's LTC.

For the broader crypto markets, the ETF approval played a massive trigger for specific token prices. 

With the sharp rise in ETH prices, the focus shifted to its Roll-up-centric roadmap of Dencun Upgrade and Protodanksharding, which sent Layer 2 token prices higher. The primary gainers from this development were Arbitrum's ARB, Optimism's OP, Polygon's MATIC, and Mantle's MNT.

Also in the investor spotlight were liquid staking protocols like LDO and RPL, which surged in TVL and are also primary beneficiaries of the upcoming Eigen Layer re-staking narrative. 

Other tokens that outperformed the broader markets include Maker's MKR which has continued to surge amid whale accumulation and increasing TVL and Solana's meme token BONK which surged more than 30% over the week.

• BTC $42,703 ⏬ 2.50%

• ETH $2,528 ⏫ 14.35%

• ARB $2.12 ⏫ 27.20% 

• MKR $2,051 ⏫ 12.50%

(All data here is as of 3.30 p.m., 15 January 2024)

Before we conclude, here’s a quick look at some important news from around the crypto world.

• Spot bitcoin ETFs are expected to attract inflows of $50-100 billion in 2024, according to Standard Chartered Bank. As a result, the price of bitcoin could rise to $200,000 by the end of 2025, according to the bank. Read more here

• Circle Internet Financial, the issuer of the USDC stablecoin, filed to sell shares to the public for the first time. The company filed a confidential draft S-1 document to the US Securities and Exchange Commission, it said in a statement. Read more here. 

Retirement Planning - A simple guide for individuals

Author: R K MOHAPATRA

R K Mohapatra is an Indian author known for his work on financial and retirement planning for individuals. This book on retirement planning seeks to create awareness about how people can live life king-size during their sunset years by making smart decisions during the pre-retirement stage.  

The book gives concrete examples in an Indian context which can help you to understand the pre-retirement stage accumulation period and post-retirement stage distribution period. The graphical presentation and analytical calculation in the tabular form of different investment products enable prospective investors to set his/her retirement goals and visualize their future life.

Invest in this gem of a book today to get a clear idea of how efficient retirement planning can help you retire wealthy and comfortably.

Before you get on with your day, don’t forget to flex those brain muscles with our weekly crypto crossword.

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

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