The Giving Season: Understanding the Universe of Charitable Vehicles

Economic

Summary:

Senior Wealth Strategist Jeff Brooks discusses the various types of charitable giving vehicles to help investors better prepare for the wealth transfer decisions commonly faced by high-net-worth and ultra-high-net-worth families.

The final quarter of the year is the busiest season for investors when it comes to fundraising and charitable giving. Successful philanthropy depends entirely on the goal or goals an investor is trying to achieve, whether they’re social goals, wealth transfer goals, personal goals, or tax deductibility.

In this article – the first in a series on philanthropic giving – we discuss the various types of charitable vehicles that may be used to maximize philanthropic success.

While this educational piece is not intended to provide tax or legal advice, it can help investors better prepare for the wealth transfer issues and decisions commonly faced by high-net-worth and ultra-high-net-worth families.

Last year, total estimated charitable giving in the U.S. topped $557 billion. Nonprofits generate the majority of donations from four giving sources: lifetime gifts from individuals, bequests from individuals in wills and trusts, gifts from charitable foundations, and gifts from corporations. Although the largest contribution comes from individual lifetime gifts (67% of total contributions), the most successful nonprofits draw from each of these sources for the most stable year-to-year funding.

Before we go into the strategic aspects of philanthropy, I thought it would be helpful to define some of the commonly used terms in the world of charitable giving – specifically, the different terms for charitable organizations that are often used interchangeably but in fact have different definitions.

Nonprofit: An organization established to serve the public good, such as feeding the hungry or providing disaster relief. Nonprofits are not subject to federal income tax.

Charity: A type of nonprofit organization with a focus on providing aid to those in need. All charities are nonprofits, but not all nonprofits are charities. Charities are not subject to federal income tax, and donations are tax-deductible.

Not-for-profit: An organization established to serve the interests of the organization’s own shareholders or members, such as a sports club or trade association. Essentially, a not-for-profit is a nonprofit that is not a charity. These entities are not subject to income tax, but donations are not tax-deductible.

501(c)(3) Organizations: These are essentially the same as charities. 501(c)(3) is the section of the Internal Revenue Code (IRC) that allows exemption of an organization from federal income taxes and the deductibility of donations. Note that the IRC grants a federal tax exemption to 32 different types of nonprofit organizations (see IRS publication 557), but only gifts to 501(c)(3) organizations provide tax deductibility of donors’ gifts.

These differences are important to understand because, while most nonprofits are tax-exempt, only charities that meet specific requirements set out by the IRC can offer donors the ability to deduct contributions from income. That is why it’s critical to confirm the recipient organization’s standing regarding tax deductibility of donations. Donors looking to achieve a tax deduction should first confirm the ability of the taxpayer to itemize deductions, and second, confirm the tax-exempt status of the recipient. This information can be found through the Internal Revenue Services’ exempt organization search function, at IRS.gov. Next, let’s look at the “why” behind charitable giving and how it is often combined with other tax and wealth transfer objectives. Social goals, wealth transfer goals, personal goals, and tax deductibility all factor into the final selection of the gifting tool used for the donation. Clarifying the investor’s true motivators is an essential step in successful charitable giving.

Philanthropic investors should consider the following:

1. What social goals am I trying to achieve by making a gift?

2. What is my overall estate plan, and how does this charitable gift further my wealth transfer goals?

3. How important are tax benefits to me? What about income tax, gift, and estate tax deductibility?

4. What personal benefits am I trying to achieve? (i.e., personal satisfaction/appreciation, an initial approach to family governance, qualification for a premium or benefit in return for my contribution).

Finally, let’s explore several techniques used for charitable giving and the most common reasons for their use.

Direct cash donations: Provides maximum value and immediate liquidity for the charity. Often the easiest but not the most tax-efficient of gifting techniques.

Donations of appreciated assets held one year or less: Deduction allowed for basis or acquisition value of asset. No recognition of gain, but no deduction for that gain.

Donations of appreciated assets held more than one year: Deduction for current value of asset. No recognition of gain and therefore no tax on that gain (win, win).

Donations of assets that have unrealized capital losses (worth less now than when acquired): It is typically best to sell the asset, realize the deductible loss, and then contribute the sales proceeds.

Gifts “with benefits”: For donors who wish to receive a premium, access, or naming rights on a building or program. This can help accomplish personal goals but may reduce deductibility.

Qualified Charitable Distributions (QCDs): Properly orchestrated direct distributions from IRAs satisfy required minimum distribution limits and shield QCDs from income. QCD contributions are allowed up to $105,000 in 2024 and are indexed for inflation thereafter. QCDs are used when required minimum distributions are not needed/wanted for personal use and the client is charitably inclined.

Charitable Gift Annuities: The recipient charity receives a donation and in return agrees to provide a series of payments back to the donor. Frequently, the charity uses a portion of the gift to purchase a commercial annuity to provide the series of payments. Charitable gift annuities are typically used to ensure lifetime cash flow to the donor and may also reduce the deductibility of the contribution.

Charitable Remainder Trusts (CRTs): A CRT is similar to a charitable annuity, except the recipient of the donation is an irrevocable trust. The terms of the trust provide an income stream of payments to the donor for a number of years (not to exceed 20) or for the life of the donor (i.e., the “lead beneficiary”). At the end of the payment term, the remaining trust assets go to charity (i.e., the “remainder beneficiary”).

CRTs are commonly used to achieve income tax benefits for clients who are charitably inclined, have highly appreciated assets, would like to sell to diversify and/or create liquidity, and wish to achieve income tax deferral on the gain. Property with unrealized capital gains is contributed to the trust. The trustee then sells the property and invests the proceeds. Because the trust is irrevocable and the remainder beneficiary is tax exempt, no immediate income tax liability results from the sale, although each payment from the trust to the donor carries an obligation to pay income tax on the amount of the distribution. Thus, a CRT is a charitable contribution that comes with income tax benefits.

Charitable Lead Trusts (CLTs): A CLT is best described as the mirror image of a CRT. CLTs are irrevocable trusts whose terms provide an income stream of payments to a charity (i.e., the “lead beneficiary”) for any number of years. At the end of the payment term, the remaining trust assets go to the individual(s) designated in the trust (i.e., the “remainder beneficiaries). CLTs are used to delay and decrease the value (and gift tax) of the gift to the individual remainder beneficiaries. CLTs are frequently used to accomplish charitable goals while potentially transferring appreciating assets to subsequent generations. Thus, whereas a CRT offers income tax benefits, a CLT is a charitable contribution that comes with gift tax benefits.

Donor Advised Funds (DAFs): DAFs are charitable accounts funded by individual donors but maintained and operated by a charity. Once the donor makes the contribution, the sponsoring charity has total control over the funds. The charity is responsible for maintaining the account, investing account contributions, and distributing the account funds with the advice of the donor. Distributions are made whenever the charity and the donor direct. The law currently does not require DAF funds to be deployed. DAFs are treated as public charities for tax-deduction purposes; however, DAFs are not a qualified recipient of a QCD.

Private Foundations (PFs): Entities established by an individual, family, or corporation to support charitable activities are treated for income tax purposes as private foundations. PFs can be organized as either a corporation or a trust. They are typically used to make grants to other charitable organizations (rather than directly operate the social programs themselves).

There are many restrictions imposed on PFs, including restrictions on self-dealing and annual distribution requirements. PFs also pay tax on net investment income earned on retained assets. Contributions to PFs may provide some tax deductibility, but it is less deductible than gifts to public charities. However, PFs allow donor control of the investment of donated assets (with some limitations) and allow the donor to control the management and distribution of fund assets (with some limitations). PFs often employ and pay family members to administer the foundation.

Investors clearly have many choices when making charitable gifts, and the list of techniques above is by no means exhaustive. Clarifying and prioritizing a client’s true goals is an essential step in successful charitable giving. Additionally, working with a client’s attorney and tax professional will greatly increase the chances for success.

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CEPR

Economic

Industrial policies have experienced a resurgence in recent years, including in emerging markets, as governments seek to reshape their economies and assert greater control over industrial sectors. This trend is likely driven by political economy factors, such as a desire for a more active state, and in response to foreign governments supporting their own domestic industries. This first in a series of three columns expands the available cross-country data on industrial policies and documents key patterns in how these policies are implemented, particularly in economies with lower administrative and fiscal capacity.

Industrial policies – policies to change the sector composition of production in an economy – have seen a resurgence in recent years. While their track record has been mixed (Hasanov and Cherif 2019, Kalouptsidi et al. 2019, Juhász et al. 2023, Barwicket al. 2024, Millot and Rawdanowicz 2024), their growing popularity may reflect domestic political economy considerations: a desire for the state to play a larger role in the economy (Kóczán and Plekhanov 2024) and voters’ preference for subsidies over taxes as the costs of the former are less salient (EBRD 2024a). Industrial policies may also appear more attractive when other countries are supporting their own industries, especially in the presence of increasing geopolitical fragmentation.

In recent research (EBRD 2024b, Kóczán et al. forthcoming), we build on the database of Juhász et al. (2023) using large language model (LLM) processing to document recent trends in industrial policies, in particular in emerging markets. We document four key stylised facts.

The use of industrial policies is on the rise, including in economies with less administrative and fiscal capacity

The use of industrial policies is on the rise in advanced economies and in other emerging markets, with increases in both the number of new policies announced in a given year and the number of policies in place at any given point in time (see Figure 1). The proportion of exports and imports covered by industrial policies has also been rising. Our results suggest that while industrial policies are more commonly seen in higher-income economies, they have been increasingly deployed in economies with lower levels of administrative and fiscal capacity.

The Visible Hand of the State: Industrial Policies in Emerging Markets_1

Economies with lower administrative and fiscal capacity are more likely to rely on distortive instruments

The instruments deployed to pursue industrial policies differ vastly. To a large extent, the choice of policy instrument is dictated by the sector, the objective of the policy and the structure of the market. Globally, grants (supporting innovation or IT start-ups, for example), export finance, import tariffs, and loans and loan guarantees provided by the state (often on concessional terms) are the most common instruments, accounting for 67% of industrial policies. Other commonly used instruments include public procurement requirements favouring certain producers, incentives for localising value added in production chains, financial assistance abroad and production subsidies.

We further find that while distortive instruments, such as import/export bans, quotas and licensing requirements are, on average, used relatively infrequently, they are more common in economies with lower levels of administrative and fiscal capacity (see Figure 2, which plots instruments against the average administrative capacity of the economies that implement them on the horizontal axis and the average capacity to raise fiscal revenue on the vertical axis).

In contrast, instruments such as trade finance, incentives to localise value added, and localisation requirements in public procurement are associated with relatively high levels of administrative capacity. Accordingly, they are more common in richer economies.

The Visible Hand of the State: Industrial Policies in Emerging Markets_2

Most industrial policies discriminate against foreign interests and firm-specific policies are common

While competitive elements can help minimise distortions associated with ‘picking winners’, recent industrial policies, both in advanced economies and in emerging markets, have predominantly discriminated against foreign interests (for instance, by establishing import barriers or subsidising domestic producers; see also Evenett et al. 2024).

Industrial policies that are firm-specific are also common (see Figure 3). Over 80% of industrial policies in Canada and the US target specific firms (through export-import loans, for instance). China stands out as having a high percentage of firm-specific policies for its level of development, with its policies typically targeting large (often state owned) enterprises in the manufacturing sector. In poorer countries, the share of firm-specific policies tends to be lower.

The Visible Hand of the State: Industrial Policies in Emerging Markets_3

Sunset clauses have become more widespread

Subsidies given to specific firms or narrowly defined industries can result in ‘addiction’ and calls for policies to be extended indefinitely, regardless of their benefits. As a result, industrial policies tend to be easier to introduce than abandon, with infant industry policies often continued well beyond those industries’ childhood years. Our findings suggest that the incorporation of sunset clauses (automatic end dates) has become more common in recent years. This development, which has coincided with the rise in more addictive instruments such as subsidies, is welcome and may, to some extent, indicate that countries are learning from decades of past experience with industrial policies. Nonetheless, policies with sunset clauses remain a minority.

Policy implications

Past experience with industrial policies offers several lessons. First, policies should incorporate competitive pressures and market-based tests, such as outward orientation and incentives for knowledge transfer. Evaluation mechanisms must be seen as an ongoing learning process. Including sunset clauses from the outset can help prevent policy ‘addiction’ and make it easier to phase out support measures when they are no longer needed. Finally, given the critical importance of effective implementation, industrial policies should be paired with continuous investment in administrative capacity and bureaucratic quality.

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UBS

Economic

At the high level, the America-first approach including the tariffs announced is no good news for the European economy. Though the planned fiscal boost to the US economy is likely to produce positive spillovers for the European economy in the short run, the tariffs, as well as possible retaliations, are likely going to hurt. While the exact conditions, timing and amount are unknown, the introduction of tariffs are expected to impede growth in Europe, particularly growth of the export-oriented countries, first and foremost the already buffed German economy.

Slower economic growth would, all things staying equal, negatively impact commercial real estate markets in Europe via the leasing market as European export-oriented firms would see their business decelerate. Furthermore, an increase in material costs and potentially imported inflation from the US might also pressure the European Central Bank to react on the interest rate side again, which would put pressure not only on the income side, but also on capital values. Slower growth, higher inflation and interest rates is poison for most asset markets, including real estate.

However, the picture is not all dark: all things do not stay equal.

As an obvious example, Trump's return has implications for Europe's security as he continuously threatened to withdraw the US support of NATO countries which do not meet their spending target of 2% of the GDP for defense. Europe will thus need to step up and there are already plans in motion to build a European Defence Union, appoint a Commissioner for Defence and ‘spend more, spend better, spend together’ on defense.1 While likely to react with some lag, logistics and manufacturing real estate would be a clear winner of regionalizing defense contracts.

In 2022, Europe spent EUR 240 billion on defense and would spend approximately EUR 80 billion more assuming all countries spent close to 2% of their GDP on defense, putting Europe’s defense expenditures at EUR 320 billion per year.2 However, estimates exist that are almost double, so the number may be much higher.3 But sticking to the lower estimate: between June 2022 and June 2023, EUR 75 billion, i.e., about one third of the defense budget, was spent on materiel. Nearly four-fifths of this was however procured outside Europe, mainly the US.4 Assuming that defense spending reaches 2% of nations’ GDP and the procurement share stays approximately constant, European defense procurement could be close to EUR 100 billion.

Clearly, if regional procurement increases, as is the EU commission’s aim, European defense contractors will likely need to expand their manufacturing capabilities, which may include larger real estate footprint, particularly in manufacturing. The demand for warehouses capable of facilitating the necessary changes in defense supply chains is likely to increase as well. This would come on top of any geopolitically-driven changes focused on e.g., securing the supply of critical raw materials and inputs in e.g., electricity generation and distribution, water supply and protection, sewage and waste management and other critical industries such as pharmaceuticals.

Furthermore, history moreover suggests that Trump brings volatility, which fuels demand for safe haven assets. Among others, that includes residential real estate, which is far less cyclical than the commercial segments. The residential sector in Europe is therefore likely to become a relative winner amongst different sectors of commercial real estate, especially as the shortage of housing is already acute and rents stay under an upwards pressure.

Trumponomics is likely to become an additional test for the European economy during a time where structural challenges are ongoing even without a change in the transatlantic partnerships. For the real estate sector, there are upsides too however as structural changes create opportunities for real estate investors. Real estate investors should thus follow the development attentively to benefit from structural changes in the European economy and the real estate sectors that serve the needs of the changing European economy.

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Goldman Sachs

Economic

The euro area economy is predicted to expand 0.8% in 2025, compared with the consensus forecast of economists surveyed by Bloomberg indicating 1.2% growth. German GDP is expected to contract 0.3% and France’s economy will shrink by 0.7%, while Spain’s GDP (again outperforming) will increase by 2%, according to Chief European Economist Sven Jari Stehn.

US President-elect Donald Trump’s planned tariffs are likely to weigh significantly on growth, with much of the drag stemming from higher trade policy uncertainty, Stehn writes in the team’s report, which is titled “Euro Area Outlook 2025: Under Pressure.” Although the region’s economy is expected to expand in the coming year, there’s a 30% chance of a significant recession.

How will tariffs impact the euro area economy?

While the size of any US tariffs is highly uncertain, Goldman Sachs Research finds that much of the drag to growth will come from higher trade policy uncertainty, rather than the actual tariff increases themselves. “Trade policy uncertainty measures have already been on the rise,” Stehn writes.

The Euro Area is Forecast to Avoid Recession Despite Trump Tariffs_1

Goldman Sachs Research’s baseline expectation is for the Trump administration to impose targeted tariffs on Europe, focusing on auto-related exports. Elevated trade tensions are projected to lower the level of area-wide real GDP by 0.5%. The hit is likely to be largest in Germany (0.6%) and smallest in Spain and Italy (0.3%), given differences in trade openness and manufacturing intensity. Our economists’ estimates suggest the hit to GDP would be twice as large in a scenario where the US imposes a 10% across-the-board tariff on the EU.

Europe’s manufacturing sector also faces structural headwinds. Energy prices have fallen markedly from their peak, but European gas prices remain notably above pre-2022 levels and are materially higher than in the US. China has emerged as a key competitor to European goods production, gaining material market share in industries that have seen cost increases.

“We see a continued structural headwind to the industrial recovery next year, particularly in Germany,” Stehn writes.

The Euro Area is Forecast to Avoid Recession Despite Trump Tariffs_2

Why the euro area is projected to avoid recession

At the same time, the euro area is also expected to undergo fiscal tightening next year. Germany’s “debt brake” will contain its scope for spending, while France aims to rein in its budget. The European Recovery Fund is expected to provide fiscal support in 2025, but the boost isn’t likely to be enough to fully compensate for the contraction in fiscal policy at the national level.

Despite those challenges, economic activity data for the euro area indicates modest but positive growth. Real (inflation adjusted) income is predicted to increase and savings are elevated, both of which are anticipated to support household spending. The economies in southern Europe are expected to be more resilient than those in the north.

“We look for growth moderation across the South next year, but we see greater resilience to trade tensions and competitive pressures from China than in the North,” Stehn writes. GDP growth in those countries has been underpinned by the services sector, elevated immigration, and investment from the Recovery and Resilience Facility.

Slow GDP growth will likely result in a softer job market next year. The unemployment rate, at 6.3% in September, is forecast to rise next year and to reach 6.7% by early 2026. Wage growth is projected to slow. “A softening labour market supports our view of cooling wage growth,” Stehn writes. “Following notable upside surprises early in the year, pay pressures have now cooled meaningfully.”

The Euro Area is Forecast to Avoid Recession Despite Trump Tariffs_3

Inflation is forecast to fall to 2% in 2025

Inflation has been declining since the summer, and headline and core inflation are projected to return to a sustainable 2% rate by the end of next year as services inflation cools.

“The outlook for inflation, however, remains notably uncertain,” Stehn writes. Depreciation in the euro could indicate stickier-than-expected inflation pressures. On the other hand, inflation could be more subdued amid a weakening job market and in the event of higher-than-expected US tariffs on China, which could incentivise China to sell excess goods at reduced prices into Europe.

Slow economic growth and declining inflation will likely pressure the European Central Bank to cut interest rates. Goldman Sachs Research expects the Governing Council to cut the deposit rate to 1.75% in July (from 3.25% in October). While 25 basis point cuts are more likely than 50 basis point reductions, there’s a “a low hurdle for a step-up in the pace in Q1 if the growth and inflation data disappoint notably,” Stehn writes.

Former ECB head Mario Draghi has identified policies that could help boost productivity and GDP expansion in Europe, but there are significant hurdles for implementation, particularly when it comes to joint EU funding. “However, we see scope for additional EU defence spending and some regulatory harmonisation from next year,” Stehn writes.

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BNP PARIBAS

Economic

As artificial intelligence (AI) continues to innovate industries, the critical role of networking infrastructure in supporting AI development is often overlooked. While much attention has been given to advancements in compute power and storage, the importance of networking is becoming increasingly apparent, especially with the rise of Large Language Models (LLMs) and AI inferencing.

BNP Paribas Exane research sheds light on how networking is an underappreciated but crucial area of AI investment. As AI models grow in complexity, so does the demand for networking infrastructure capable of supporting them.

The evolving landscape of AI networking infrastructure

The scaling of AI models and inferencing workloads has led to a shift in procurement strategies, particularly for hyperscalers and large enterprises that now prioritise networking infrastructure. This shift is evident in the growing demand for AI-enabled back-end networks and traditional front-end networks. Supporting AI clusters that span thousands of compute nodes requires robust networking systems, and investors are beginning to take note.BNP Paribas Exane shows that the Total Addressable Market (TAM) for AI networking could encompass 25% of total AI spending on accelerators. Furthermore, data-center switch sales could nearly double, and sales of back-end switches could even quadruple over the next few years.

"As AI technology evolves, the importance of networking infrastructure continues to grow, presenting unique opportunities for business and investors alike. "—Karl Ackerman (Managing Director, Semiconductors & IT Hardware, BNP Paribas Exane)

The battle for AI networking supremacy: Ethernet vs. InfiniBand

At the heart of AI networking there are two prominent technologies: Ethernet and InfiniBand. InfiniBand has historically dominated AI networking due to its ability to meet the stringent demands of back-end AI networks. However, Ethernet is catching up fast. With its inherent flexibility, Ethernet users are closing the performance gap and potentially even surpassing InfiniBand in certain areas.

BNP Paribas Exane examines that the Ethernet ecosystem is maturing rapidly. The industry is preparing for smart NICs (Network Interface Cards) with flexible ordering capabilities that will support packet spraying—a key innovation aimed for release by the second half of 2025.

The future of AI networking infrastructure

As the technology matures, BNP Paribas Exane anticipates that Ethernet will capture an increasing share of the AI networking market. By 2027, BNP Paribas Exane projects Ethernet will command 46% of AI workload networking—a significant leap that underscores the growing importance of networking in the AI universe.

" As AI continues to push the boundaries of technological innovation, the demand for sophisticated networking solutions will likely intensify. "

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SAXO

Economic

Cryptocurrency

Bitcoin ETF options are making waves: here's what you need to know

Bitcoin has made its way from obscure internet forums to the boardrooms of Wall Street, but a new development might be its most significant step yet. The debut of options trading on Bitcoin ETFs, starting with BlackRock’s iShares Bitcoin Trust (IBIT), isn’t just another headline for crypto enthusiasts—it’s a game-changer for investors everywhere.

But what exactly are these Bitcoin ETF options? Why are they so important, and how could they impact both the crypto market and traditional finance? As these sophisticated financial tools gain traction, they might just reshape how we think about Bitcoin and its role in global markets.

What are bitcoin ETFs and options?

Bitcoin exchange-traded funds (ETFs), like IBIT, offer investors a way to gain exposure to Bitcoin through traditional financial markets without directly holding the cryptocurrency. Options, on the other hand, are contracts that give the holder the right (but not the obligation) to buy or sell an asset at a specific price within a set time frame. These tools, long staples in traditional finance, are now being introduced to Bitcoin ETFs, providing a regulated and accessible way to hedge, speculate, or manage risk in the crypto market.

Market on Edge: Bitcoin ETF Options are Making Waves: Here's What You Need to Know_1

Bitcoin's path to market maturity

The debut of Bitcoin ETF options introduces a new level of sophistication to the crypto market. These instruments bring advanced risk management tools into a sector defined by volatility and retail speculation. Institutional traders can now apply strategies like covered calls and synthetic longs, long established in traditional finance, to Bitcoin without needing direct exposure.

Options trading also fosters market depth, reducing volatility by creating “natural buyers and sellers” on both sides of the order book. This contrasts sharply with Bitcoin's historical behavior, where news events often caused wild price swings. With IBIT options, Bitcoin may enter a new phase of tempered volatility, appealing to more institutional investors.

Market on Edge: Bitcoin ETF Options are Making Waves: Here's What You Need to Know_2

Broader impacts on the cryptocurrency ecosystem

The introduction of IBIT options could ripple far beyond Bitcoin. As traditional financial tools integrate into crypto markets, they could bolster investor confidence, attract capital to altcoins, and deepen blockchain infrastructure.

Notably, other ETFs like Grayscale and Bitwise are preparing to launch options products, while Cboe Global Markets will introduce the first cash-settled Bitcoin index options on December 2, 2024. These options, based on the Cboe Bitcoin U.S. ETF Index, are designed to track spot Bitcoin ETFs listed on U.S. exchanges. Such initiatives reinforce the growing legitimacy of digital assets and their adoption in mainstream finance.

Comparing IBIT and gold ETFs

To understand the significance of IBIT’s growth, consider a comparison with BlackRock’s iShares Gold Trust (IAU), a long-established ETF providing exposure to gold:

Assets under management (AUM): IBIT manages $48.43 billion, surpassing IAU’s $34.01 billion. This reflects the rapid demand for cryptocurrency exposure.

Trading volume: IBIT averages 66 million daily trades, far outpacing IAU’s 4.23 million. The liquidity highlights Bitcoin’s growing appeal as a tradable asset.

Premium/discount to NAV: IBIT trades at a -0.05% discount, while IAU trades at a +0.40% premium. This suggests efficient pricing for IBIT relative to its NAV.

Maturity: Launched in January 2024, IBIT is a newcomer compared to IAU, which has been a portfolio staple since 2005.

While IAU remains a cornerstone for conservative investors seeking stability, IBIT is proving to be a strong player in the rapidly evolving digital asset space.

Navigating market sentiment and expectations

Early trading data for IBIT options reveals a heavily bullish sentiment, with nearly 289,000 call contracts traded compared to just 65,000 puts on the first day. Speculative activity has driven some bets to extreme levels, with traders purchasing calls that imply Bitcoin prices exceeding $170,000.

While these “moonshot” strikes grab attention, many options traders are pursuing balanced strategies like covered calls or synthetic longs to manage risks. These approaches make IBIT options versatile, catering to speculators and cautious institutions alike.

Conclusion: a transformative step for Bitcoin

The launch of options on the IBIT ETF is a pivotal moment, reshaping Bitcoin's financial landscape. By introducing tools to temper volatility, improve liquidity, and deepen market participation, Bitcoin is evolving from a speculative digital asset to an integral part of mainstream finance.

As more Bitcoin ETFs introduce options and innovative derivative products emerge, the cryptocurrency space will likely become more resilient and diverse. The hidden impacts of Bitcoin ETF options are just beginning to unfold, promising to redefine how investors engage with the crypto market.

To stay updated on all economic events of today, please check out our Economic calendar

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FastBull Featured

Daily News

[Quick Facts]

1. US Core PCE Index Rebounds

2. UK Service Sector Business Confidence Falls to Its Fastest Decline in Two Years Due to Increased Taxes in Budget

3. Trump's Team Considers Three Potential Solutions to Resolve the Russia-Ukraine Conflict

4. Canadian Minister of Labour Announces Failure to End Post Strike

[News Details]

US Core PCE Index Rebounds

Following Thanksgiving Day, US data hit a peak with the release of October PCE data, which showed a YoY increase of 2.3% (up from 2.1%) and a MoM increase of 0.2% (up from 0.2%). The Core PCE Index rose by 2.8% YoY (up from 2.7%) and 0.3% MoM (up from 0.3%).

The Core PCE Index is up for the first time since June, primarily due to rising service prices. Core service prices increased by 0.4% MoM in October, the largest increase since March. Core commodity costs remained stable.

Despite the PCE data matching market expectations, the market's reaction to the continuation of inflation is relatively limited. However, uncertainty looms as the US market will face "Black Friday" promotions after Thanksgiving Day, marking the start of the holiday season. This period will provide insight into the US consumer market.

Greater uncertainty will emerge in early January when Trump returns to the White House. His actions and statements have already affected financial markets and market expectations.

UK Service Sector Business Confidence Falls to Its Fastest Decline in Two Years Due to Increased Taxes in Budget

The CBI reported that optimism among consumer services businesses fell from -19 in August to -55 in November, the lowest since August 2022. Business and professional service sectors also experienced a decline in optimism, falling from 9 to -29.

The decline in UK service sector business confidence is the fastest in two years, partly due to increased taxes in Chancellor Rishi Sunak's October 30 government budget. Consumer services suffered the most, with large service sector employers expected to bear a £25 billion increase in wage tax. The CBI noted that business and professional service sector confidence also worsened.

Weakened confidence, reduced hiring intentions, and increased cost pressures reflect, at least partially, the impending increase in employer National Insurance rates.

Trump's Team Considers Three Potential Solutions to Resolve the Russia-Ukraine Conflict

Two sources familiar with the situation said that Trump's national security advisor, Mike Waltz, has been weighing several potential solutions to the Russia-Ukraine conflict. Although details of the strategy are still being formulated, Trump's officials may push for an early ceasefire to freeze the conflict during negotiations between the two sides.

According to Keith Kellogg, the special envoy for Ukraine and Russia, the first proposal involves continuing military aid to Ukraine on the condition that Kyiv engages in peace talks with Russia and proposes an "American policy of seeking a ceasefire and resolving the conflict through negotiation." At the same time, Ukraine's desire to join NATO will be "postponed" for a longer period to encourage Russia to participate in negotiations.

The second proposal is based on a proposal made by Rick Grenell, a former US ambassador to Germany, who previously expressed support for creating "autonomous zones" in Ukraine. However, he did not elaborate on what this would look like.

Another idea is to allow Russia to retain the territories it currently controls in exchange for Ukraine joining NATO. However, few people in Trump's circle seem willing to invite Ukraine to NATO in the short term.

Canadian Minister of Labour Announces Failure to End Postal Strike

Canadian Labour Minister Steven MacKinnon announced through social media that the disagreement between Canada Post and the union is too great to reach an agreement and end the strike. He also announced that special federal mediators had temporarily stopped mediation. MacKinnon explained that the suspension of mediation activities would allow both parties to re-evaluate their positions and return to the negotiating table with renewed determination.

MacKinnon has requested that both parties meet in his office. If both sides can "restart productive negotiations," special mediators will resume contact with both sides. Canada Post began a national strike on November 15, involving approximately 55,000 postal workers, causing a complete halt to Canada Post's operations.