Question
You are an investment bank analyst who oversees the cryptocurrency market. Your job is to produce a comprehensive report to help external stakeholders (e.g., policymakers;
You are an investment bank analyst who oversees the cryptocurrency market. Your job is to produce a comprehensive report to help external stakeholders (e.g., policymakers; institutional clients, etc) to understand the investment perspective of cryptocurrency. While many experts argue that cryptocurrency such as Bitcoin shares very similar features to Gold (store of value and being resistant against inflation), some others insist that cryptocurrency has no value at all. The key issue to address in this report is whether cryptocurrency is really like Gold so the cryptocurrency can store the value. The report should be self-contained, which means the external stakeholders can understand the key reasoning and your recommendations through your research, quantitative analysis, and discussion. The key tasks that the report should cover are:
Conducting article review (at least 10 articles to be reviewed) from The Economist & the other Academic Journals for summarizing the key issues and arguments about the cryptocurrencys value (15%) Download daily prices of BitCoin, Ether, and Cardano from Yahoo Finance over the last 7 years. Also, download the gold price and S&P 500 index from Yahoo Finance and perform the following analyses: (25%) Calculate the yearly average cryptocurrencys returns and yearly standard deviation; yearly average gold returns and yearly average S&P 500 index returns. Use the data visualization tools (e.g., Histogram; Scatter Plots, etc) to show the patterns from Step 1 among different cryptocurrencies returns, gold returns and S&P 500 returns. And discuss your findings with relevant research support (e.g., is there any obvious relationship among those assets in the graph?). In 2019 and 2020, what were the probabilities that Bitcoins returns, Ethers returns, and Golds returns were negative? In 2019 and 2020, what was the probability that Bitcoins returns were negative when Golds returns were negative at the same time? Discuss your findings. Based on the sample analysis, calculate the statistical mean-difference between bitcoins returns and golds returns and conduct regression analysis for bitcoins' returns and gold's returns in the past 7 years and discuss your findings. Do extra research to present your final conclusion on whether the investment in cryptocurrencies and the investment in gold are similar in the past 7 years. If cryptocurrency is not like Gold, then what could be the other factors to support the cryptocurrencies value?
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