Bitcoin investition per - simply does
Will Bitcoin touch $K in ? Here’s why you should invest now
The rally in Bitcoin and other crypto doesn't seem to have run out despite the % surge in price. And with emerging startups such as CoinSwitch Kubertrying to make Bitcoin investing effortless, millions of retail investors have joined the Bitcoin Bandwagon.
Putting short term volatility aside and looking at the long run, analysts state that it could touch $, (Rs 72 lakhs) next year.
The rise of Bitcoin
By , Bitcoin gained more popularity and touched $1, After the second Bitcoin Halving event took place, the coin rose significantly in value to $19, However, there was a minor blip, and after , its value dropped and its price settled at about $5, at the start of
Since then, it has been a year-long rally amid two significant events.
- The global pandemic: most people sought bitcoin as a hedge against the shaky economic crisis caused by the spread of Covid Even institutional investors such as Microstrategy, Tesla, Square Corp etc., resorted their cash reserves into Bitcoin, stating that it was a good store of value against inflation.
- Third Bitcoin Halving event: Halving happens once in four years, where the rewards of Bitcoin Mining are cut down by half. After the third halving, the mining prize, BTC, was reduced to BTC in May It reduced the coins in circulation significantly, thus triggering a higher demand.
Could Bitcoin really hit $,?
The digital currency that was once viewed as mysterious by many in the past has now exploded in both value and popularity. It has mainly become mainstream - Giant financial institutions like Paypal, Visa, JP Morgan etc., are offering crypto services, and more retail investors are interested in purchasing Bitcoin now more than ever.
Despite its volatility, bitcoin has surged in value, especially in the past year. We could attribute this Bitcoin rally to two things:
- Better trust
- Global trends
At the same time, the world is now witnessing Bitcoin being associated with more institutional investors like Tesla, Microstrategy etc. Most institutions are now considering converting their cash reserves into Bitcoin as a hedge against financial crises.
Of course, many other cryptos have joined the race, which diverts some retail investors' interest away from it. Nevertheless, it remains the most significant cryptocurrency with a total market capitalization of $ trillion, higher than the combined market cap of the world's three largest banks (J.P Morgan, Bank of America, and The Industrial and Commercial Bank of China).
Bitcoin is now closer to $K than it is closer to $0. The recent developments around Bitcoin worldwide are a testament to the fact that it is inching closer to becoming a mainstream asset class.
Is it too late to invest in Bitcoin?
Bitcoin has been breaking into all-time highs every month since October It surpassed the mark of $50, (₹37 lakhs) recently, and it seems to be heading near $60, (₹ lakhs) soon.
Although it would have been ideal for an investor to have entered the investment space earlier in , it does not mean that it is now too late to invest in Bitcoin, provided that you invest what you can afford.
There may be dips in its value from time to time, but even a small investment you make in Bitcoin today could return manifold in the long run.
What is the minimum investment required to buy Bitcoin?
Although one Bitcoin price may seem overwhelming, retail investors can choose to buy fractional amounts of Bitcoin. Some Indian platforms, such as CoinSwitch Kuber, allow its users to invest in Bitcoins with a minimum of just Rs
Considering the above data and trends around the crypto market, we could say that there is a lot of margin-left for Bitcoin. Its value could only increase in the future.
Disclaimer: This above is non-editorial content and TIL hereby disclaims any and all warranties, express or implied, relating to the same. TIL does not guarantee, vouch for or necessarily endorse any of the above content nor is responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.
( Originally published on Mar 22, )
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Hedge funds expect to hold 7% of assets in crypto within five years
Hedge funds plan to significantly increase their exposure to cryptocurrencies by , a new survey shows, in a major vote of confidence for digital assets after recent large price falls and plans for punitive new capital rules.
A survey of hedge fund chief financial officers globally, conducted by fund administrator Intertrust, found that executives expect to hold an average of per cent of their assets in cryptocurrencies in five years&#x; time.
If replicated across the sector, that could equate to a total of about $bn of assets in cryptos, based on data group Preqin&#x;s forecast for the total size of the hedge fund industry, Intertrust estimated. Seventeen per cent of respondents expected to have more than 10 per cent in crypto.
This would represent a large increase in appetite among hedge funds. Current holdings in the sector are unclear, but a number of big-name managers have already committed small amounts to crypto assets, attracted by soaring prices and market inefficiencies that they can arbitrage.
Man Group trades bitcoin futures in its computer-driven AHL unit, while Renaissance Technologies last year said its flagship Medallion fund could invest in bitcoin futures. Hedge fund manager Paul Tudor Jones has bought into Bitcoin, while Brevan Howard has been shifting a small portion of funds into crypto and its co-founder, billionaire Alan Howard, is a major backer of the industry.
Bitcoin is the largest contributor to gains this year at US fund firm SkyBridge Capital, set up by former White House communications director Anthony Scaramucci, which started buying it late last year and then trimmed its holding going into April &#x; just before the price of the token fell.
Hedge funds are well aware not only of the risks but also the long-term potential of cryptos, said David Miller, executive director at Quilter Cheviot Investment Management.
The growing enthusiasm shown by hedge funds stands in sharp contrast to widespread scepticism among more traditional asset managers, many of whom remain concerned about cryptocurrencies&#x; huge volatility and uncertainty over how they will be regulated.
For the moment, crypto investments remain limited to clients that have a high risk tolerance and, even then, investments are typically a low proportion of investable assets, Morgan Stanley and Oliver Wyman, the consultancy, said in a recent report on asset management.
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Some hedge funds remain wary. Paul Singer&#x;s Elliott Management wrote to investors earlier this year that cryptocurrencies could possibly become the greatest financial scam in history in a letter seen by the Financial Times.
Cryptos have experienced a wild ride again this year. Bitcoin soared from less than $29, at the end of last year to more than $63, in April, but has since fallen back to just over $40,
While the future regulation of cryptos remains unclear, last week the Basel Committee on Banking Supervision said they should carry the toughest bank capital rules of any asset.
Intertrust&#x;s survey, whose respondents include CFOs globally of funds that on average manage $bn in assets, also showed that all the executives surveyed in North America, Europe and the UK expect to have at least 1 per cent of their portfolio in crypto.
North American funds expect to have exposure of per cent on average, while those in the UK and Europe expect per cent on average.
www.oldyorkcellars.comer@www.oldyorkcellars.com
Abstract
This study aims to explore the potential use of the cryptocurrency bitcoin as an investment instrument in Indonesia. The return obtained from bitcoin cryptocurrency is compared to other investment instruments, namely stock returns, gold and the rupiah exchange rate. The research period was carried out based on research data from to This study employee compares means test (t test) and analysis of variance (F test) on rate of return of bitcoin investment. The bitcoin return compare to the rate of return form the others investments instruments namely exchange rate, gold and stock. The study collected data of each investments instruments: bitcoin, exchange rate, gold and stock from various of sources during – Then, we calculate the return and risk of individual investment instruments. The results showed that the bitcoin currency had the highest rate of return 18% with a standard deviation of 61% compared to exchange rate, gold and stock returns. While the rate of return for the others investment instruments showed less than % with standard deviation less than 5%. The rate of return bitcoin has significance difference compare to the rate of return of exchange rate, gold and stock. The study contribute for the investors who would like to invest on bitcoin. The investors should understand the characteristic of bitcoin in term of rate of returns and also the risk. This study also contributes to government of Indonesia on crypto currency development. The Indonesia government should adopt and regulate on crypto currency in the future to secure the investor and economic growth.
Keywords
- Cryptocurrency
- bitcoin
- stocks
- gold
- exchange rate
Sunita Dasman*
- Universitas Pelita Bangsa, Bekasi, Indonesia
*Address all correspondence to: sdasman@www.oldyorkcellars.com;, www.oldyorkcellars.com@www.oldyorkcellars.com
1. Introduction
As cryptocurrencies become popular and market places for cryptocurrencies are growing rapidly. Understanding the rate of return can support cryptocurrency world is and how design choices affect investors. One threat to cryptocurrencies is high fluctuations in traders’ willingness to buy or sell [1]. The adoption of crypto assets has been a great concern for policy makers ever since Facebook announced its cryptocurrency, Libra, in June [2].
The technology behind these cryptocurrencies, a decentralized and open-source system named “blockchain” is often presented as one of the most innovative technology offering several many disruptive innovations in the next years [3, 4, 5, 6]. The crypto-currencies trading volume also has a granger-causality to energy consumption [7]. A crypto asset is an intangible digital asset whose issuance, sale or transfer are secured by cryptographic technology and shared electronically via a distributed ledger [8].
The era of digitalization of technology has given birth to the cryptocurrency Bitcoin (BTC) as a new exciting currency for the world community, including Indonesia. BTC is an alternative to complement the needs of global financial transactions that want convenience, efficiency and security. Use of the digital computing tools to process scientific, economic, and social information has changed the human capacity, considerably. Virtual space is being activated year over year being the result of efficient application of information resources [9].
The development of BTC is very rapid in Indonesia. Indonesia, which has a total population of , people in (BPS, ). The population of Indonesia is very potential for the growth of the investment climate for BTC.
Almost all countries in the world experienced a decline in economic growth in due to the 19 virus pandemic. However, BTC price growth showed a very significant increase in BTC prices recorded the best performance since amounting to USD / BTC. The price of BTC is USD 12, in or an increase of % compared to amounting to USD 7, / BTC (investing, ). Table 1 shows the development of the value of BTC (USD / BTC) in –
Table 1.
Operational variable.
The baseline used to calculate the composite stock price index is the average price of the shares on August 10,
Source: various sources,
Indonesians who start investing in bitcoin currency can change the existing financial asset structure. The development of bitcoin currency in Indonesia can disturb the stability of the rupiah as the only valid currency for domestic transactions. Therefore, Bank Indonesia as the determinant of monetary policy has not or has not legalized bitcoin currency as a virtual currency in Indonesia.
This research aims to examine bitcoin cryptocurrency as an investment instrument opportunity compared to other investment instruments, namely stocks, gold and the rupiah exchange rate. For the government as policy makers, this research is expected to be an input for the development of digital currency in the era of information technology. In addition, for investors, this research is expected to illustrate the returns and risks faced when investing in bitcoin (Figure 1).
2. Literature review and hypothesis development
The study and analysis of the cryptocurrency market is a relatively new area. A few works published in recent years have had the potential interest in this topic. Many scientists have been studying Bitcoin from different angles ever since it appeared. Cryptocurrency is a digital currency, whose creation and control is based on cryptographic methods. Some researchers claim that Bitcoin is just a bubble. The fundamental value of Bitcoin is difficult to reveal, and history shows that innovative assets are indeed more prone to bubbles [10].
Bitcoin is the first decentralized peer-to-peer payment network that is fully controlled by its users without any central authority or intermediary. Bitcoin is a digital currency residing in an open source P2P (peer-to-peer) payment network. P2P is a computer network model that consists of two or more computers, where each computer in the network environment can share. This network makes it easy for users to transact directly without the need for services from third parties.
The elements of Bitcoin are the existence of a peer-to-peer network, blocks, blockchain, and miners. The peer-to-peer network in Bitcoin allows users to transfer a certain amount of Bitcoin value, these transactions are stored in files called blocks, these blocks are intertwined with each other to form a block chain called the blockchain, and miners solve complex mathematical formulas. to prove ownership of Bitcoin.
Bank Indonesia responds to the existence of Bitcoin if it can be used, traded, or stored as an asset or a form of digital commodity by the people of Indonesia, but it cannot be used as a means of payment because only the Rupiah currency is the only legal means of payment in Indonesia.
Bitcoin is the first implementation of the concept of cryptocurrency, which was first described by Wei Dai in The proposes of cryptocurrency is a new form of money that uses cryptography to control creation and transactions rather than using a centralized authority.
Cryptocurrency is a digital asset designed to function as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify asset transfers Cryptocurrency is a type of alternative currency and digital currency. Cryptocurrencies use decentralized controls compared to centralized digital currencies and central banking systems.
Cryptocurrency is a virtual currency that circulates without being regulated by a particular central bank, is not “backed up” with gold as currency, and is not protected by any particular country. Distribution and use through the internet network media. With this crypto many benefits are obtained without exchanging it for real money, the value of crypto prices has international standards so that the value is the same everywhere, the transfer time is very fast, and crypto is not owned by a particular company. Crypto is a digital asset where transactions are carried out using an online network. Crypto assets are virtual so if one wants to see what the physical form of this currency is, then the answer is no. The form is not like a physical currency issued by a bank and also not the currency of a country.
Investors can maximize asset allocation through a combination of risky assets to reduce high risk. Investors who have an aversion to risk tend to reject investments that are more likely to have speculative content. Investors who do not like risk consider risk-free investments or speculate on investments that have a positive premium.
Research related to virtual currency, especially bitcoin cryptocurrency, is still rarely done in Indonesia. However, the development of bitcoin cryptocurrency has recently begun so that further studies are needed to provide an overview to the public and policy makers regarding bitcoin cryptocurrency investment. Some of the research results that have been carried out both domestically and globally can be summarized as follows:
Voskobojnikov et al. [11] identified and qualitatively analyzed 6, reviews pertaining to the user experience with top five mobile cryptocurrency wallets. They suggested that both new and experienced users struggle with general and domain-specific user experience issues that, aside from frustration and disengagement, might lead to dangerous errors and irreversible monetary losses. They reveal shortcomings of current wallet user experience as well as users’ misconceptions, some of which can be traced back to a reliance on their understanding of conventional payment systems. Based on their findings, they provide recommendations on how to design cryptocurrency wallets that both alleviate the identified issues and counteract some of the misconceptions in order to better support newcomers.
Hachicha and Hachicha [12] proved the efficiency of Markov Chain for our sample and the convergence and stability for all parameters to a certain level. On the whole, it seems that permanent shocks have an effect on the volatility of the price of the bitcoin and also on the other stock market. Our results will help investors better diversify their portfolio by adding this cryptocurrency.
Mikhaylov, A. [10] conclude that the cryptocurrency market has entered a new stage of development, which means a reduced possibility to have excess profits when investing in the most liquid cryptocurrencies in the future. However, buying new high-risk tools provides opportunities for speculative income.
Igoni et al. [13] concluded that market capitalization and volume of digital currency did not constitute the significant variables of policy to influence the monetary policies in the South African economy, hence they operate independently. A decision to adopt and regulate digital currency operation or not in Nigeria does not affect. They recommend the Nigerian to embrace the digital environment in terms of regulations for tax advantage.
Le Tran and Leirvik [14] shown that the level of market-efficiency in the five largest cryptocurrencies is highly time-varying. Specifically, before , cryptocurrency-markets are mostly inefficient. This corrobo-rates recent results on the matter. However, the cryptocurrency-markets become more efficient over time in the period – This contradicts other, more recent, results on the matter. The reason is that they apply a longer sample than previous studies. Another important reason is that they apply a robust measure of efficiency, being directly able to determine if the efficiency is significant or not. On average, Litecoin is the most efficient cryptocurrency, and Ripple being the least efficient cryptocurrency.
Agosto and Cafferata [15] found that extremely rapid price accelerations, often referred to as explosive behaviors, followed by drastic drops pose high risks to investors. From a risk management perspective, testing the explosiveness of individual cryptocurrency time series is not the only crucial issue.
Rabbani et al. [16] identified that the sharia compliance related to the cryptocurrency/Blockchain is the biggest challenge which Islamic Financial Technology organizations are facing. During our review we also find that Islamic Financial Technology organizations are to be considered as partners by the Islamic Financial Institutions (IFI’s) than the competitors. If Islamic Financial institutions want to increase efficiency, transparency and customer satisfaction they have to adopt Financial Technology and become partners with the Financial Tech companies.
Hairudin et al. [17] indicated that public embrace of cryptocurrencies continues to lag as the masses currently show reluctance in embracing cryptocurrencies as a complement, let alone a substitute to fiat counterparts. Governments have also successfully defended their sovereignty in preserving legal tender status, structural seignior age and exclusivity. Market-based studies hint at consistent inefficiencies across the spectrum. The most promising areas of research for crypto-financial intelligentsia would be delving into establishing trial runs for central bank-backed cryptocurrencies.
Grobys et al. [18] indicated that a variable moving average strategy is successful when using the 20 days moving average trading strategy. Specifically, excluding Bitcoin the technical trading rule generates an excess return of % p.a. after controlling for the average market return. The results suggest that cryptocurrency markets are inefficient.
Amsyar et al. [19] concluded that cryptocurrency has the disadvantage of not having the authority responsible for dealing with all problems that occur in all transactions, and money laundering crimes also often occur, this is a challenge for how to utilize cryptocurrency and blockchain technology in the current era of globalization.
Vaz de Melo and Fluminense [20] indicated that indicate that the strength of dependence among the crypto-currencies has increased over the recent years in the cointegrated crypto-market. The conclusions reached will help investors to manage risk while identifying opportunities for alternative diversified and profitable investments.
Tu et al. [21] detected two sudden jumps in the standard deviation, in the second quarter of and at the beginning of , which could have served as the early warning signals of two major price collapses that have happened in the following periods. They propose a mean-field phenomenological model for the price of cryptocurrency to show how the use of the standard deviation of the residuals is a better leading indicator of the collapse in price than the time-series’ autocorrelation. Their findings represent a first step towards a better diagnostic of the risk of critical transition in the price and/or volume of crypto-currencies.
Fang et al. [22] summarized the existing research papers and results on cryptocurrency trading, including available trading platforms, trading signals, trading strategy research and risk management. This paper provides a comprehensive survey of cryptocurrency trading research, by covering research papers on various aspects of cryptocurrency trading (e.g., cryptocurrency trading systems, bubble and extreme condition, prediction of volatility and return, crypto-assets portfolio construction and crypto-assets, technical trading and others). This paper also analyses datasets, research trends and distribution among research objects (contents/properties) and technologies, concluding with some promising opportunities that remain open in cryptocurrency trading.
Dro&#;d&#; et al. [23] found that A particularly significant result is that the measures applied for detecting cross-correlations between the dynamics of the BTC/ETH and EUR/USD exchange rates do not show any noticeable relationships. This could be taken as an indication that the cryptocurrency market has begun decoupling itself from the Forex.
Panagiotidis et al. [24] found that a significant interaction between bitcoin and traditional stock market. The increased impact of Asian markets on Bitcoin compared to other geographically-defined markets. Two years after the Chinese regulatory interventions and the sudden construction of CNY’s share in bitcoin trading volume.
Aysan et al. [25] found that bitcoin can be considered as a hedging tool against global geopolitical risk.
Krafft et al. [1] found that individual “buy” actions led to short-term increases in subsequent buy-side activity hundreds of times the size of our interventions. From a design perspective, we note that the design choices of the exchange we study may have promoted this and other peer influence effects, which highlights the potential social and economic impact of HCI in the design of digital institutions.
Panagiotidis et al. [26] found that search intensity and gold returns emerge as the most important variables for bitcoin returns.
Koutmos [27] found that the contribution of return shocks to transaction activity is quantitatively larger in magnitude.
Demir et al. [28] found that bitcoin can serve as a hedging tools again uncertainty.
Balcilar et al. [29] found that non-linear relationship between bitcoin returns and trading volume. The trading volume cannot help to predict the volatility of returns at any point of the conditional distribution.
Urquhart [30] found that bitcoin return significantly inefficient but in the process of moving towards an efficient market.
Based on the research objectives, the researcher wants to compare the returns obtained from bitcoin currency and others investment instrument, namely stocks, exchange rates and gold to see how rate of return behavior on bitcoin currency. Besides measure rate of return on bitcoin currency, the researcher also measures the risk of bitcoin currency investment. Standard deviation of bitcoin currency employee to measure the risk of the investment. Thus, the statistical hypotheses and research hypotheses used in this study are as follows:
Ho1: μ&#; = μ&#;.
Ha1: μ1 ≠ μ2.
Ho2: μ1 = μ3.
Ha2: μ1 ≠ μ3.
Ho3: μ1 = μ4.
Ha3: μ1 ≠ μ4.
Ho4: μ&#; = μ2 = μ3 = μ4.
Ha4: At least one of the average returns are not equal.
where:
μ1 = average bitcoin returns.
μ2 = average exchange rate returns.
μ3 = average gold returns.
μ4 = average stock returns.
While the research hypothesis developed in this study is as follows:
H There is no difference between the bitcoin returns and the exchange rate returns.
Ha1: There is a difference between the bitcoin returns and the exchange rate returns.
H There is no difference between the bitcoin returns stock and the gold returns gold.
Ha2: There is a difference between the bitcoin returns and the gold returns.
H There is no difference between the bitcoin returns and the stock returns.
Ha3: There is a difference between the bitcoin returns and the stock returns.
H There is no difference between the bitcoin returns and the others investment instrument.
Ha4: There is a difference between the bitcoin returns and the others investment instrument.
3. Methodology
This study compares the return and risk of bitcoin, stocks, gold and the rupiah exchange rate. This research is a type of quantitative research using secondary data. Secondary data used in the study were obtained from www.oldyorkcellars.com [31]; for bitcoin and share prices. Gold prices were obtained from www.oldyorkcellars.com [32]; Rupiah exchange rate is obtained from www.oldyorkcellars.com [33]. The research period from to used monthly data or observed data.
The return calculation uses the formula for the difference from the current value to the previous value divided by the value in the previous period. In general, the return formula can be written as follows:
E1
where:
Rt = the return at period t.
Rt-1 = the return at period t−1.
In this study also measure risk of each investment instruments. Standard deviation is employed to measure the risk of investments. Standard deviation to measure how far the deviation from the average of each investment instruments. The higher standard deviation value means the higher risk of the investment. Here the formula to measure standard deviation (σ):
E2
where:
σ = standard deviation of investment.
n = number of observation.
r(s) = return of investment.
r = average of investment.
Table 1 shows the operational variables used in this study include investment instruments, namely bitcoin, exchange rates, gold and stock.
4. Research Results
Statistical descriptions include the average, minimum value, maximum value and standard deviation of each investment instrument, namely bitcoin, exchange rate returns, gold returns and stock returns during the study period – Bitcoin’s return has the largest average of 18% compared with returns from other investment instruments. In addition, the standard deviation of bitcoin returns has the largest value of % compared to other investment instruments. The range of bitcoin returns between −% till %. Table 2 shows the descriptive statistics of the investment instruments studied.
| Instrument | N | Min | Max | Mean | Std. dev. |
|---|---|---|---|---|---|
| Bitcoin (μ1) | − | ||||
| Exchange Rate (μ2) | − | ||||
| Gold (μ3) | − | ||||
| Stock (μ4) | − |
Table 2.
Descriptive statistic.
Source: data processing,
The correlation matrix between investment instruments can be found in Table 3. The highest correlation is obtained from the return stock and return exchange rate (−). The more the stock return increases, the lower the return exchange rate will be. In other words, the stronger the rupiah exchange rate, the more the composite stock price index will increase. The strengthening of the rupiah exchange rate had an impact on increasing domestic economic growth so that investors invested heavily in stocks. Therefore, stock returns also increase when there is an increase in the rupiah exchange rate. Meanwhile, bitcoin does not show a correlation with other investment instruments which is indicated by a correlation matrix value below 5%. This figure shows that the bitcoin returns are not affected by the others instruments investments returns namely exchange rate, gold and stock returns.
| Instrument | Stock | Exchange Rate | Gold | Bitcoin |
|---|---|---|---|---|
| Stock | 1 | |||
| Exchange Rate | − | 1 | ||
| Gold | − | 1 | ||
| Bitcoin | − | 1 |
Table 3.
Correlation matrix.
Source: data processing,
An overview of the return fluctuations obtained from each investment instrument of stock return, exchange rate return, gold return and bitcoin return can be seen in Figures 2–5. Each investment instrument shows different return fluctuations. The lowest standard deviation is the exchange rate %, while the highest standard deviation is Bitcoin %. In other words, investment in bitcoin have the highest risk compared to the alternative investment instruments. The others investment instruments have low risk between % till %. Investment in foreign exchange rate has the lowest risk compared to the others alternative investments. Investment on gold and stock have similar risks around % to %.
The range of the largest fluctuation was obtained from the return on bitcoin investment, especially in the period to In , bitcoin returns reached the highest point where returns increased from 10–70%. However, the return drastically decreased to (−5%) entering It means the investment in bitcoin get the highest return and also the highest risk compared to the others instrument of investment.
The next test was to compare the returns between each investment instrument through paired sample tests, namely stock-exchange rate, stock-gold, stock-bitcoin, exchange rate-gold, exchange rate-bitcoin and gold bitcoin. Table 4 shows the results of the paired sample test of each investment instrument.
| Instrument | Mean | Std. dev. | Std. error mean | t | df | Sig. |
|---|---|---|---|---|---|---|
| Bitcoin - Ex. Rate | − | − | ||||
| Bitcoin - Gold | − | − | ||||
| Bitcoin - Stock | − | − |
Table 4.
Paired samples test.
Source: data processing,
The results of the paired samples test of returns between investment instruments can be seen in Table 4. The results of the paired sample test between bitcoin and the others investment instruments shows significant level less than It means that is difference of return between bitcoin and the others investment instruments. The average means difference of bitcoin and the others investment instruments around −%. Standard deviations show around 61% of investment on bitcoin. It means that the highest risk of bitcoin investments.
Based on the results of testing paired samples test return on investment between investment instruments and the explanation above, it can be concluded that the research hypothesis is as follows:
Ha1: There is a difference between the bitcoin and the exchange rate return (accepted at significance level ).
Ha2: There is a difference between the bitcoin and the gold return (accepted at significance level ).
Ha3: There is a difference between the bitcoin and the stock return (accepted at significance level ).
One sample test is conducted to prove whether or not there are differences between the investment instruments used in this study. The one sample test results show that bitcoin returns provide a very significant difference (α < ) compared to other investment instruments: exchange rate, gold and stock. The average return of stock, exchange and gold investment instruments.
Table 5 shows analysis of variance single factor for each investment instruments. The variance of bitcoin the highest () if compared to stock, exchange rate and gold returns (–). It means there us a big different between bitcoin returns and the others investment instruments.
| Groups | Count | Sum | Average | Variance |
|---|---|---|---|---|
| Stock return | ||||
| Ex-Rate return | ||||
| Gold Return | ||||
| Bitcoin return |
Table 5.
Anova single factor summary.
Source: data processing,
Table 6 shows analysis of variance to test hypothesis 4 whether there is significant level of the return. The result indicates that F calculation () is higher than F critical value (2,). It means there is significant different between bitcoin and the others investment instruments.
| Source of variation | SS | df | MS | F | P-value | F crit |
|---|---|---|---|---|---|---|
| Between Groups | 3 | |||||
| Within Groups | ||||||
| Total |
Table 6.
Anova single factor test.
Source: data processing,
Based on the results of the analysis of variance single factor test shows that there is a difference between the average return of all investment instruments. Thus, the statistical hypothesis and research hypothesis (Ha4) is accepted at significant level or can be written down as follows:
Ha4: There is a difference between the investment instruments (accepted at significance level ).
Based on the average test between the research instruments used, bitcoin has a very significant difference in return compared to other investment instruments. Meanwhile, stock investment instruments, exchange rate and gold have the same average return.
5. Conclusions
Based on the research results discussed in the previous chapter indicate that the investment in bitcoin still promising. The price of bitcoin rapidly increase during the study – The rate of return of bitcoin investment is the highest compared to the other investment instruments: stock, exchange rate and gold. Meanwhile, the bitcoin investment also has the highest risk compared the others investment instruments.
It can be concluded that bitcoin investment provides the highest return (18%) compared to other investment instrument returns. However, the very high return on bitcoin comes with high risk investment. The risk of investing in bitcoin is indicated by a standard deviation of 61%, while the standard deviation of other instruments: stock, exchange rate and gold less than 5%.
Based on the results of the paired sample test, it shows that the average return on bitcoin shows a very significant difference compared to the others instrument. Meanwhile, the return on the others instrument: stock, exchange rate and gold show the same return.
For the investors who love risk, then the investment in bitcoin could be an alternative for an investment. The investment on bitcoin promise higher return compare to the other investment instruments. For the investors who are risk aversion, an investment on bitcoin doesn’t fit since this investment have the highest risk.
This research has practical implication for the investors who require high return. In the same time, the investors also have to understand the risk along the investment on bitcoin.
The other implication for government of Indonesia as policy maker on crypto currency. The crypto currency quite develops rapidly in this crypto world era. The role and regulation on crypto currency are needed to secure investors and economic growth.
References
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Submitted: May 15th, Reviewed: August 13th, Published: September 24th,
© The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
With tax at 30%, is it still logical to invest in cryptocurrencies?
Finance Minister Nirmala Sitharaman announced the tax on gains arising from virtual assets at a flat rate of 30 per cent without any exemptions or deductions.
The high rate of taxation and high volatility in crypto tokens has raised a few logical questions in the investor community.
On the contrary, crypto platforms and experts believe with the clarity in the taxations, the participation from those who have been sitting on the sidelines is likely to increase, despite the higher tax rate.
Nischal Shetty, CEO, WazirX said that the added visibility of taxation should definitely help investors deliberate better in terms of how much they should allocate to virtual assets as an investment product.
"For new investors, the taxation statements give adequate clarity and should boost investments from users who were awaiting such statements from the government before investing in virtual asset classes," said Shetty of WazirX.
Budget announcements are the first step forward towards a full regulatory framework reckoning the same, Avinash Shekhar, CEO, ZebPay, believes that it is still viable for investors to hold crypto.
Exchanges believe that the budget announcement has elevated the status of the virtual assets class and expects the charm to continue among the investors.
Edul Patel, Co-founder and CEO, Mudrex said that investing in cryptocurrency helps in diversification. This is a great time for Indian investors to get on the cryptocurrency journey. "Retail players awaiting a regulatory nod would definitely be interested."
Investors and crypto HODlers are wondering if they should rejig their investment strategy or persist with the new as the new guidelines and tax regulations are out.
Investments are a very personal decision and the strategy in terms of amount of investment, tenure and risk appetite varies from person to person.
Experts say that existing investors do not need any major rejig after the budget announcement. "Investors should simply carry on with their existing strategy until further clarifications come out from the budget announcements, '' Patel added.
For the new investors, experts said that new crypto investors should initially focus and stick to blue chip names of the crypto market. Investing around strong themes and sectors could be a great way to begin the investment journey.
"Investors holding crypto for the long-term need not change their strategy at all,'' said Shekhar. However, tax levied on digital asset transfer is likely to discourage day traders from working in crypto, he added.
Crypto players suggest that investors should use the SIP way or invest in a staggered manner in the crypto assets. Investing a small amount periodically allows investors to maximize their profits, with protection from the market volatility.
"Invest for the long term, and be conscious of doing research before you do. Follow the rupee cost averaging approach to reduce your exposure," said Shekhar of Zebpay. "High tax on digital asset transfer is likely to discourage day traders."
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Commentary: Don’t trust the hype – Bitcoin will never be a wise investment
Rather, CBDCs function as straightforward digital versions of conventional bank accounts. In principle, they could be implemented as individual accounts with the central bank for every consumer and business in its jurisdiction.
Alternatively, those accounts could be guaranteed by the central bank, but held with a wide range of private financial institutions.
CBDCs represent nothing new. They are not a revolutionary development like decentralised, DLT-based cryptocurrencies.
But that revolution has already failed, because Bitcoin and similar cryptocurrencies are extremely unattractive as stores of value. No sensible investor should go near them (unless she has very deep pockets and extremely low risk aversion).
READ: Commentary: Is Dogecoin the next investment craze after GameStop?
READ: Commentary: Amid record high value, Tesla's bitcoin bet raises uncomfortable questions
ENVIRONMENTAL COST OF BITCOIN
Moreover, Bitcoin’s extremely high energy demand is another nail in its coffin. Bitcoin transactions are verified through proof-of-work “mining” operations that require exorbitantly energy-intensive computational efforts.
The Cambridge Bitcoin Electricity Consumption Index estimates annualised consumption at terawatt-hours – more than that of Argentina. Simply put, Bitcoin and other proof-of-work cryptocurrencies are an environmental disaster.
Worse, cryptocurrencies can be replicated without bound, further amplifying the environmental damage. As of Mar 29, CoinMarketCap listed 4, cryptocurrencies, starting with Bitcoin (with a US$ trillion market cap) and followed by Ethereum (with a US$ billion market cap).
The bottom line is clear: Bitcoin is an excessively risky and environmentally undesirable investment. It is not a sensible solution to any emerging-market problem, and it cannot possibly serve as a store of value or reliable medium of exchange.
The sooner it and other DLT-based cryptocurrencies are relegated to a footnote in economic history, the better.
If none of what happened with GameStop made sense to you, listen to the author of this commentary break down how different players powered the surge and which listed company could see copycat attacks in CNA's Heart of the Matter podcast:
Willem H Buiter is Visiting Professor of International and Public Affairs at Columbia University.
Digital currencies are continuing to make headlines. Berkshire Hathaway, the company of star investor Warren Buffett, has bought $1 billion worth of stock in a digital bank focusing on cryptocurrencies.
However, regulators and central banks remain concerned. The price of bitcoin plunged to $34, in February from $69, in November. It is now around $39, So should you join the hype or run a mile?
In this article we explain:
Related content: Is cryptocurrency a good investment?
This article contains affiliate links that can earn us revenue.*
What is bitcoin and how does it work?
The concept of digital money that you use online is not that complicated in itself. After all, most of us will be familiar with transferring money from one online bank account to another.
Cryptocurrencies like bitcoin are digital assets that operate like normal currency, but with notable differences. They use peer to peer payment methods, without the banks taking a cut with every transaction. There are no physical versions of the coins either.
Each bitcoin is created (or mined) using an encrypted code, which is a string of numbers and letters. The same equation used to create the code is can “unlock” it (like a virtual key).
Other important points about bitcoin:
- Cryptocurrencies, like bitcoin, ethereum and cardano, are a form of payment that uses blockchain technology to send data in cyberspace
- Each bitcoin must be mined
- It is finite: only 21 million bitcoins that can be mined in total
- Cryptocurrencies are “decentralised” meaning they are not regulated by a financial authority, like a government or central banks
- Most platforms will allow bitcoin purchases using credit cards (bear in mind that your credit card provider will probably charge you a fee to do this)
Why has bitcoin dropped?
The price of bitcoin and several other leading cryptocurrencies suffered huge falls in December and prices have been on a downward trajectory so far in
The Fed&#;s January meeting to decide whether to raise interest rates saw crypto fall along with other stocks and shares.
The bitcoin price is around $35,, as of 24 February, according to data from Coinbase*. That&#;s a long way from the all-time high of $69, seen in November.
The recent turmoil has been caused by:
- Uncertainty around rising interest rates in the US and UK, causing a sell-off in risky assets
- China making cryptocurrency transactions illegal
- Suggestions that Russia could ban cryptocurrency trading and mining, causing prices to plummet
There have also been threats of further regulation for cryptocurrency investments in the future.
Should I invest in bitcoin?
Bitcoin is extremely volatile. If you are willing to take the risk, first make sure you understand what you are investing in and have a crypto investment strategy.
Also make sure you aren&#;t investing simply because you have a fear of missing out. There are a number of questions you should ask yourself before getting involved:
- Do I understand what I am investing in and how bitcoin and the crypto market work?
- Am I happy with the level of risk?
- How much more expensive is it now compared to a few months ago? If so, why am I wanting to buy a thing because its price is higher? Where else in my life do I do that?
- Is there any evidence to suggest prices could rise even higher?
- If I buy it now with a view to sell it for even more later, who do I think will buy it from me for that higher price and why?
- If an asset is so great, why was I not interested when it was much cheaper?
- Have I convinced myself that I am in some way “in the know?”
If you don’t have answers to these questions, it’s probably not a good idea to invest. If you do buy bitcoin, make sure you aren’t putting money you need on the line. Read more about cryptocurrency tips (and mistakes to avoid).
If you are new to investing and want to know more about the general principles and how to get started, check out our guide here.
Like any investment, cryptocurrency comes with risks and potential rewards. Compared to traditional types of investments, cryptocurrency is particularly risky.
Here are some things to think about before you invest:
- We definitely don&#;t recommend investing all your life savings on cryptocurrency markets
- It&#;s best to see it a bit like gambling so only invest small amount of your disposable income and be prepared to lose the lot
- Never invest more than you can afford to lose
- If you haven&#;t got much money left at the end of each month, it&#;s best to steer clear of crypto and focus on saving your money instead
- Like traditional assets, it&#;s best to treat cryptocurrency as a long-term investment to give you the best chance of making money
- Cryptocurrencies are extremely volatile, subject to bull runs and market crashes
The ups and downs of bitcoin
It is hailed by fans as a market-disrupting liberation and demonised by many personal finance experts as a dangerous creation. One things for sure is that bitcoin is volatile.
Since December , bitcoin has enjoyed a theatre of dramatic ups and downs. We outline some of these here: is a bitcoin crash coming?
The problem is that the price of cryptocurrencies is not underpinned by any intrinsic value. It is determined by one thing: confidence, says Mark Northway, investment manager at Sparrows Capital.
So if you decide to invest, be prepared for a bumpy ride.
Can you lose all your money in bitcoin?
Yes you certainly can. Crypto is very risky and not like conventional investing in the stock market.
Bitcoin&#;s value is based purely on speculation. This is different to company stocks where the share price will move depending on how the business is performing.
Important: cryptocurrencies are unregulated by the UK watchdog, the Financial Conduct Authority. Crypto platforms are only regulated for anti-money laundering purposes.
There are three main ways to lose all you money with bitcoin:
- The value plummetsand you sell: crypto is volatile with its price determined by sentiment. Though technically you only lose money if you sell an investment for less than you bought it for. This is known as “crystallising your losses”.
- Your memory: experts estimate 20 per cent of all cryptocurrency has either been forgotten about or lost with a current value of around $billion, according to Crypto data firm Chainalysis
- Cyber crime: hackers and scammers are thought to steal around $10million worth of cryptocurrency every day, according to Atlas VPN
Some people choose to take their holdings offline and store it in a physical device called a cold wallet, otherwise known as a hardware wallet or cold storage that is similar to a USB stick. While this protects from online attacks you risk losing your holdings.
As with any investment, do your due diligence and don’t pin all your hopes on one company or one cryptocurrency.
Spread your money around so you spread the risk and only invest what you can afford to lose.
How to make money by investing in bitcoin
Like any investment, making money depends on what price you buy and sell an asset for. If you sell when its price is higher than you bought it for, you will make money.
If you sell for a lower price than you bought it for, you will lose money.
For example, if you had invested in bitcoin at the start of:
- and sold on 31 December , you would have made a % profit
- and sold on 31 December , you would have made a 73% loss
Bitcoin is extremely volatile so the trick is not to panic and crystallise your losses by selling when its value inevitably falls. This is the same with all investments.
Ways to invest in bitcoin
Buying the coins (or unit of a coin) on a cryptocurrency exchange is the most common way of investing in bitcoin.
But there are other options:
Buy shares in bitcoin-related companies
You could invest in cryptocurrency exchanges or even buy shares in companies that are accepting bitcoin as payment.
Bitcoin ETFs
You could invest in a bitcoin exchange traded fund ETF. This copies the price of the digital currency, allowing you to buy into the fund without actually trading bitcoin itself.
Invest in blockchain technology companies
You could invest in the blockchain network (the system for recording information about crypto). For example, tech platform Solana claims to be the fastest blockchain in the world.
Bitcoin funds
Several investment companies are launching bitcoin funds.
It will still be volatile, but it could be easier to sell your investment and get your money back than investing directly.
There are also funds that have some exposure to bitcoin as well as traditional assets like shares and bonds.
Bitcoin options
These are a form of financial derivative that gives you the right to buy or sell bitcoin at a set price (known as a strike price) before a certain date of expiry.
Unlike buying bitcoin cryptocurrency outright, bitcoin options enable you to take a speculative position (up or down) on the future direction of a market price.
You would buy a call option if you believe the market price would increase:
- If your prediction was correct and the market price increased above the bitcoin option’s strike price, you’d be able to buy bitcoin at the pre-specified price. How far the bitcoin price rose past the strike price determines how much profit you’d make.
- If your prediction was wrong and the price of bitcoin fell, you could let the options contract expire and only lose the premium you paid to open the trade.
Read aboutLewis, who taught himself about cryptocurrency and made £8, in less than a year after setting up an account with trading platform eToro.
Is bitcoin bad for the environment?
The digital currency uses as much power as the Netherlands every year, with just 30 countries using more energy, according to researchers from the University of Cambridge.
Computers that mine bitcoin use up to 1% of the world’s electricity supply.
While some of bitcoin’s consumption is renewable (an estimated 39%), fossil fuels are still being used to power the mining and servicing of the digital currency.
This is why electric car manufacturer Tesla has stopped accepting crypto payments, causing bitcoin to fall. Find out more in our Guide to eco-friendly cryptocurrencies.
What are the fees when buying bitcoin?
If you want to buy and sell bitcoin, there are usually fees to pay, such as:
- Transaction fees
- Deposit fees
- Withdrawal fees
- Trading fees
- Escrow fees
These usually cost a few percent of the total transaction value.
Do financial institutions support bitcoin?
Governments, regulators and companies are looking closely at bitcoin and other cryptocurrencies.
Companies adopting bitcoin include:
Investment companies that are showing an interest include:
- The world’s largest asset manager, BlackRock, opened two of its funds to the possibility of investing in bitcoin futures
- UK based Ruffer Investment Management added bitcoin to its multi-asset portfolios before pulling out five months later with a $B profit
- In , one of the world&#;s biggest index providers, S&P Dow Jones Indices announced it would launch indexing services in for over of the top traded cryptocurrencies.
The Bank of England has been exploring the possibility of its own central bank-backed digital currencies. This has been dubbed as &#;britcoin&#;. Other central banks like the Federal Reserve have been doing the same.
As more institutional investors get on board with crypto assets for capital gains, this could help to calm dramatic price moves.
Crypto friendly banks UK
Most of the UK&#;s major banks now let you move money between a regulated crypto exchange and your bank account.
However, some banks are more cautious than others. For example, Starling Bank had imposed a temporary suspension on outbound faster payments to cryptocurrency exchanges in order to protect customers.
The banks are continually weighing up the risks. Some make it easier for customers to move money to and from crypto exchanges.
What is Binance and can I still use it in the UK?
The UK financial watchdog has blacklisted cryptocurrency exchange Binance and banned it from carrying out any regulated activity over concerns about its money laundering controls.
The regulator has also ordered the company to stop any form of advertising in the UK.
Binance isn&#;t based in the UK, so the British regulator doesn&#;t have the power to stop investors from buying and selling cryptocurrency using the exchange. However exchanges do have to register with the FCA to operate in the UK and are monitored for money-laundering.
This is a clear warning that investors should be very cautious.
Why are regulators concerned?
The FCA has also warned investors to be wary about companies that promise high returns from cryptocurrency. The nature of investment means that there is never a guarantee of making money.
In January the FCA banned the sale of complex derivatives that speculate on cryptocurrency movements.
This means that financial services can&#;t offer retail customers contracts for difference, spreadbet options, futures and exchange traded notes that focus on digital currencies.
China&#;s crypto ban
Trading cryptocurrency in China has been illegal since , in what Beijing says is an attempt to stop money-laundering. People could still trade online however on foreign exchanges.
At the end of September , China&#;s central bank went a step further by banning bitcoin transactions and basically making cryptocurrency illegal. The central bank warned that cryptocurrency &#;seriously endangers the safety of people&#;s assets&#;, which knocked thousands of dollars off the price of bitcoin.
Banks and payment firms are banned from providing cryptocurrency transaction services. In May , three state-backed organisations announced there would be no protection for consumers if they lost any money from crypto trading.
The following month, banks and payment platforms were told to stop facilitating transactions while bans were issued on crypto &#;mining&#;.
Amazon to accept bitcoin as payment?
If the rumours are true, the technology company could accept bitcoin payments sooner rather than later which could drive the price of the cryptocurrency upwards.
This comes after Amazon posted a job advert looking to hire someone to develop its digital currency strategy.
Amazon isn&#;t the only tech giant to be branching into cryptocurrency; there are rumours circulating that Apple will use some of its large cash reserves to invest in bitcoin.
&#;Given the huge volatility and that the use case of crypto currencies is far from proven, traders should only dabble with money they can afford to lose.’’
Susannah Streeter
Senior Investment and Markets Analyst, Hargreaves Lansdown
Is there a less risky way of investing in crypto?
“Stablecoins” could be a less risky way of investing in cryptocurrency, according to Gavin Brown, associate professor in financial technology at the University of Liverpool.
Brown points to tether, the largest stablecoin, backed by one dollar per coin. It topped the $50bn mark on 26 April but he warns that potential investors shouldn&#;t necessarily see tether as the next big thing.
&#;In theory it won&#;t ever be worth more than a dollar. But it&#;s potentially an interesting option for any varied portfolio and it could be a slice of stability if [other] things start to suffer.&#;
The stablecoin has not been without controversy either &#; being fined by the New York Attorney General and banned from the state the year.
Source of data: Yahoo Finance / CoinMarketCap
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Bitcoin's Price History
Among asset classes, Bitcoin has had one of the more volatile trading histories. The cryptocurrency’s first big price increase occurred in when the value of a single bitcoin jumped from just a fraction of a penny to $
The cryptocurrency has undergone several rallies and crashes since it became available. Learn more about Bitcoin's volatility bitcoin investition per some reasons why its price acts the way it does.
Key Takeaways
- Since it was first introduced, Bitcoin has had a choppy and volatile trading history.
- Bitcoin's price has risen and fallen sharply over its short history.
- As an asset class, Bitcoin continues to evolve along with the factors that influence its prices.
- Bitcoin's narrative has shifted—while it is still a cryptocurrency, it also provides a way to store value, hedge against inflation and market uncertainty, and allow investors to gain exposure to cryptocurrency within their portfolios.
Bitcoin Price History
The price changes for Bitcoin alternately reflect investor enthusiasm and dissatisfaction with its promise. Satoshi Nakamoto, the anonymous Bitcoin inventor(s), designed it for use as a medium for daily transactions and a way to circumvent traditional banking infrastructure after the financial collapse.
Bitcoin investition per then, the cryptocurrency has gained mainstream traction as a means of exchange and attracted traders who bet against its price changes. It has also morphed into a different investment type—a way to store value and hedge against inflation; additionally, Bitcoin has investments linked to its price, bitcoin investition per.
Though this new narrative may prove to hold more merit, the past price fluctuations primarily stemmed from retail investors and traders betting on an ever-increasing price without much grounding in reason or facts.
But Bitcoin's price story has changed in recent times. Institutional investors are trickling in as the cryptocurrency markets mature, and regulatory agencies are crafting rules specifically for them. Though Bitcoin pricing remains volatile, it is now a part of the mainstream economy instead of a tool for speculators looking for quick profits.
Here's a quick rundown of Bitcoin's past:
–
Bitcoin had a price of inexpensive hobbies that make money when it was introduced in On July 17, bitcoin investition per,its price jumped to $ Bitcoin's price rose again on April 13,from $1 to a peak of $ by June 7,a gain of 2,% within three months. A sharp recession in cryptocurrency markets followed, and Bitcoin's price bottomed out at $ by mid-November. The following year, its price rose from $ on May 9 to $ by Aug, bitcoin investition per.
proved to be a generally uneventful year for Bitcoin, but witnessed strong gains in price, bitcoin investition per. It began the year trading at $ and reached $ on April 8; an equally rapid deceleration in its price followed, bringing its price down to $ a few weeks later on July 4.
In early October, Bitcoin was trading at $; by December, it had spiked to $1, bitcoin investition per, and fell to $ three days later. Bitcoin's prices slumped through and touched $ at the start of
–
Prices slowly climbed through to over $ by the end of the year. InBitcoin's price hovered around $1, until it broke $2, in mid-May and then skyrocketed to $19, on Dec. Mainstream investors, governments, economists, and scientists took notice, and other entities began developing cryptocurrencies to compete with Bitcoin.
Bitcoin's price moved sideways for the next two years with small bursts of activity. For example, there was a resurgence in price and trading volume in Junewith prices surpassing $10, However, it fell to $6, by mid-December.
In the economy shut down due to the COIVD pandemic—Bitcoin's price burst into activity once again. The cryptocurrency started the year at $6, The pandemic shutdown and subsequent government policy fed investors' fears about the global economy and accelerated Bitcoin's rise. At close on Nov. 23, Bitcoin was trading for $19, Bitcoin's price reached just under $29, in Decemberincreasing % from the start of that year.
–Present
Bitcoin took less than a month in to smash its price record, surpassing $40, by Jan. 7, By mid-April, Bitcoin prices reached new all-time highs of over $60, as Coinbase, a cryptocurrency exchange, bitcoin investition per, went public. Institutional interest further propelled its price upward, and Bitcoin reached a peak of more than $63, on April 12,
By the summer ofprices were down by 50%, hitting $29, at the lowest on July Autumn saw another bull run in September, with prices scraping making money young goon, but a large drawdown took it to $40, about two weeks later.
On Nov. 10,Bitcoin again reached an all-time high, $68, In early DecemberBitcoin fell to $49, before fluctuating more as uncertainty about inflation continued to spook investors alongside the emergence of a new variant of COVID, Omicron.
El Salvador made Bitcoin legal tender on June 9, It was the first country to do so, and it can be used for any transaction where businesses accept it.
Which Factors Influence Current Bitcoin Price?
Like other currencies, products, bitcoin investition per, or services within a country or economy, Bitcoin and other cryptocurrency prices depend on perceived value and supply and demand. If people believe that Bitcoin is worth a specific amount, they will pay it, especially if they think it will increase in value.
By design, there will only ever be 21 million Bitcoins created. The closer Bitcoin gets to its limit, the higher its price will be, as long as demand remains the same or increases.
Bitcoins are created by mining software and hardware at a specified rate. This rate splits in half every four years, slowing down the number of coins created. Following the laws of supply and demand, Bitcoin's price should continue to rise as its supply may not be able to meet its demand—as long as it continues to grow in popularity. However, if popularity wanes and demand falls, there will be more supply than demand, and Bitcoin's price should drop unless it maintains its value for other reasons.
Economic circumstances can also affect Bitcoin's price as seen during the COVID pandemic.
Another factor that affects Bitcoin investition per price falls in bitcoin investition per with supply and demand; Bitcoin has also become an instrument that investors and financial institutions use to store value and generate returns. Derivatives are being created and traded by brokers, investors, and traders, acting to influence Bitcoin's price further, bitcoin investition per. Speculation, investment product hype, irrational exuberance, or investor panic and fear can also be expected to affect Bitcoin's price because demand will rise and fall with investors' sentiments.
Other cryptocurrencies may also affect Bitcoin's price. There are several cryptocurrencies, and the number continues to rise as regulators, institutions, and merchants address concerns and adopt them as acceptable forms of payment and currency. Lastly, if consumers and investors believe that other coins will prove to be more valuable than Bitcoin, demand will fall, taking prices with it—or demand will rise, along with prices, if sentiments change in the opposite direction.
How Long Does It Take to Mine One Bitcoin?
The rate of difficulty changes. Mining depends on the software and hardware used as well as available energy resources, but the average time to find a block is about ten minutes.
Where Does Bitcoin Come From?
Bitcoin was created by an anonymous person or group using the name Satoshi Nakamoto in A Bitcoin is mined by specialized software and hardware and is created when an increasingly difficult mathematical problem is solved.
How Much Is One Bitcoin Now?
Prices fluctuate, but Bitcoin reached an all-time high price of $68, on Nov. 10,
What Was Bitcoin's Cheapest Price?
When Bitcoin began trading at $ in July
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, bitcoin investition per, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns/does not own cryptocurrency.
Commentary: Don’t trust the hype – Bitcoin will never be a wise investment
Rather, CBDCs function as straightforward digital versions of conventional bank accounts. In principle, they could be implemented as individual accounts with the central bank for every consumer and business in its jurisdiction.
Alternatively, those accounts could be guaranteed by the central bank, but held with a wide range of private financial institutions.
CBDCs represent nothing new. They are not a revolutionary development like decentralised, DLT-based cryptocurrencies.
But that revolution has already failed, because Bitcoin and similar cryptocurrencies are extremely unattractive as stores of value. No sensible investor should go near them (unless she has very deep pockets and extremely low risk aversion).
READ: Commentary: Is Dogecoin the next investment craze after GameStop?
READ: Commentary: Amid record high value, Tesla's bitcoin bet raises uncomfortable questions
ENVIRONMENTAL COST OF BITCOIN
Moreover, Bitcoin’s extremely high energy demand is another nail in its coffin. Bitcoin transactions are verified through proof-of-work “mining” operations that require exorbitantly energy-intensive computational efforts.
The Cambridge Bitcoin Electricity Consumption Index estimates annualised consumption at terawatt-hours – more than that of Bitcoin investition per. Simply put, Bitcoin and other proof-of-work cryptocurrencies are an environmental disaster.
Worse, cryptocurrencies can be replicated without bound, further amplifying the environmental damage. As of Mar 29, CoinMarketCap listed 4, cryptocurrencies, starting with Bitcoin (with a US$ trillion market cap) and followed by Ethereum (with a US$ billion market cap).
The bottom line is clear: Bitcoin is an excessively risky and environmentally undesirable investment. It is not a sensible solution to any emerging-market problem, and it cannot possibly serve as a store of value or reliable medium of exchange.
The sooner it and other DLT-based cryptocurrencies are relegated to a footnote bitcoin investition per economic history, bitcoin investition per, the better.
If none of what happened with GameStop made sense to you, listen to the author of this commentary bitcoin investition per down how different players powered the surge and which listed company could see copycat attacks in CNA's Heart of the Matter podcast:
Willem H Buiter is Visiting Professor of International and Public Affairs at Columbia University.
Will Bitcoin touch $K in ? Here’s why you should invest now
The rally in Bitcoin and other crypto doesn't seem to have run out despite the % surge in price. And with emerging startups such as CoinSwitch Kubertrying to make Bitcoin investing effortless, millions of retail investors have joined the Bitcoin Bandwagon.
Putting short term volatility aside and looking at the long run, analysts state that it could touch $, (Rs 72 lakhs) next year.
The rise of Bitcoin
ByBitcoin gained more popularity and touched $1, After the second Bitcoin Halving event took place, bitcoin investition per, the coin rose significantly in value to $19, However, there was a minor blip, and afterits value dropped and its price settled at about $5, at the start of
Since then, it has been a year-long rally amid two significant events.
- The global pandemic: most people sought bitcoin as a hedge against the shaky economic crisis caused by the bitcoin investition per of Covid Even institutional investors such as Microstrategy, Tesla, Square Corp etc., resorted their cash reserves into Bitcoin, stating that it was a good store of value against inflation.
- Third Bitcoin Halving event: Halving happens once in four years, where the rewards of Bitcoin Mining are cut down by half, bitcoin investition per. After the third halving, the mining prize, BTC, was reduced to BTC in May It reduced the coins in circulation significantly, thus triggering a higher demand.
Could Bitcoin really hit $,?
The digital currency that was once viewed as mysterious by many in the past bitcoin investition per now exploded in both value and popularity. It has mainly become mainstream - Giant financial institutions like Paypal, Visa, JP Morgan etc., are offering crypto services, and more retail investors are interested in purchasing Bitcoin now more than ever.
Despite its volatility, bitcoin has surged in value, especially in the past year. We could attribute this Bitcoin rally to two things:
- Better trust
- Global trends
At the same time, bitcoin investition per, the world is now witnessing Bitcoin being associated with more institutional investors like Tesla, Microstrategy etc. Most institutions are now considering converting their cash reserves into Bitcoin as a hedge against financial crises.
Of course, many other cryptos have joined the race, which diverts some retail investors' interest away from it. Nevertheless, it remains the most significant cryptocurrency with a total market capitalization of $ trillion, higher than the combined market cap of the world's three largest banks (J.P Morgan, Bank of America, and The Industrial and Commercial Bank of China).
Bitcoin is now closer to $K than it is closer to $0. The recent developments around Bitcoin worldwide are a testament to the fact that it is inching closer to becoming a mainstream asset class.
Is it too late to invest in Bitcoin?
Bitcoin has been breaking into all-time highs every month since October It surpassed the mark of $50, (₹37 bitcoin investition per recently, and it seems to be heading near $60, (₹ lakhs) soon.
Although it would have been ideal for an investor to have entered the investment space earlier init does not mean bitcoin investition per it is now too late to invest in Bitcoin, provided that you invest what you can afford.
There may be dips in its value from time to time, but even a small investment you make in Bitcoin today could return manifold in the long run.
What is the minimum investment required to buy Bitcoin?
Although one Bitcoin price may seem overwhelming, retail investors can choose to buy fractional amounts of Bitcoin. Some Indian platforms, such as CoinSwitch Kuber, allow its users to invest in Bitcoins with a minimum of just Rs
Considering the above data and trends around the crypto market, we could say that there is a lot of margin-left for Bitcoin. Its value could only increase in the future.
Disclaimer: This above is non-editorial content and TIL hereby disclaims any and all warranties, express or implied, relating to the same, bitcoin investition per. TIL does not guarantee, vouch for or necessarily endorse any of the above content nor is responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.
( Originally published on Mar 22, )
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Abstract
This study aims to explore the potential use of the cryptocurrency bitcoin as an investment instrument in Indonesia. The return obtained from bitcoin cryptocurrency is compared to other investment instruments, namely stock returns, gold and the rupiah exchange rate. The research period was carried out based on research data from to This study employee compares means test (t test) and analysis of variance (F test) on rate of return of bitcoin investment. The bitcoin return compare to the rate of return form the others investments instruments namely exchange rate, gold and stock. The study collected data of each investments instruments: bitcoin, exchange rate, gold and stock from various of sources during – Then, we calculate the return and risk of individual bitcoin investition per instruments. The results showed that the bitcoin currency had the highest rate of return 18% with a standard deviation of 61% compared to exchange rate, gold and stock returns. While the rate of return for the others investment instruments showed less than % with standard deviation less than 5%. The rate of return bitcoin has significance difference compare to the rate of return of exchange rate, gold and stock. The study contribute for the investors who would like to invest on bitcoin. The investors should understand the characteristic of bitcoin in term of rate of returns and also the risk. This study also contributes to government of Indonesia on crypto currency development. The Indonesia government should adopt and regulate on crypto currency in the future to secure the investor and economic growth.
Keywords
- Cryptocurrency
- bitcoin
- stocks
- gold
- exchange rate
Sunita Dasman*
- Universitas Pelita Bangsa, Bekasi, Indonesia
*Address all correspondence to: sdasman@www.oldyorkcellars.com;, www.oldyorkcellars.com@www.oldyorkcellars.com
1. Introduction
As cryptocurrencies become popular and market places for cryptocurrencies are growing rapidly. Understanding the rate of return can support cryptocurrency world is and how design choices affect investors. One threat to cryptocurrencies is high fluctuations in traders’ willingness to buy or sell [1]. The adoption of crypto assets has been a great concern for policy makers ever bitcoin investition per Facebook announced its cryptocurrency, Libra, in June [2].
The technology behind these cryptocurrencies, a decentralized and open-source system named “blockchain” is often presented as one of the most innovative technology offering several many disruptive innovations in the next years [3, 4, 5, 6]. The crypto-currencies trading volume also has a granger-causality to energy consumption [7]. A crypto asset is an intangible digital asset whose issuance, sale or transfer are secured by cryptographic technology and shared electronically via a distributed ledger [8].
The era of digitalization of technology has given birth to the cryptocurrency Bitcoin (BTC) as a new exciting currency for the world community, including Indonesia. BTC is an alternative to complement the needs of global financial transactions that want convenience, efficiency and security. Use of the digital computing tools to process scientific, economic, and social information has changed the human capacity, considerably. Virtual space is being activated year over year being the result of efficient application of information resources [9].
The development of BTC is very rapid in Indonesia. Indonesia, which has a total population ofpeople in (BPS, ). The population of Indonesia is very potential for the growth of the investment climate for BTC.
Almost all countries in the world experienced a decline in economic growth in due to the 19 virus pandemic. However, BTC price growth showed a very significant increase in BTC prices recorded the best performance since amounting to USD / BTC. The price of BTC is USD 12, in or an increase of % compared to amounting to USD 7, / BTC (investing, ). Table 1 shows the development of the value of BTC (USD / BTC) in –
Table 1.
Operational variable.
The baseline used to calculate the composite stock price index is the average price of the shares on August 10,
Source: various sources,
Indonesians who start investing in bitcoin currency can change the existing financial asset structure. The development of bitcoin currency in Indonesia can disturb the bitcoin investition per of the rupiah as the only valid currency for domestic transactions. Therefore, Bank Indonesia as the determinant of monetary policy has not or has not legalized bitcoin currency as a virtual currency in Indonesia.
This research aims to examine bitcoin cryptocurrency as an investment instrument opportunity compared to other investment instruments, namely stocks, gold and the rupiah exchange rate. For the government as how to invest in gold bonds sbi makers, bitcoin investition per, this research is expected to be an input for the development of digital currency in the era of information technology. In addition, for investors, this research is expected to illustrate the returns and risks faced when investing in bitcoin (Figure 1).
2. Literature review and hypothesis development
The study and analysis of the cryptocurrency market is a relatively new area. A few works published in recent years have had the potential interest in this topic. Many scientists have been studying Bitcoin from different angles ever since it appeared. Cryptocurrency is a digital currency, whose creation and control is based on cryptographic methods. Some researchers claim that Bitcoin is just a bubble. The fundamental value of Bitcoin is difficult to reveal, and history shows that innovative assets are indeed more prone to bubbles [10].
Bitcoin is the first decentralized peer-to-peer payment network that is fully controlled by its users without any central authority or intermediary. Bitcoin bitcoin investition per a digital currency residing in an open source P2P (peer-to-peer) payment network. P2P is a computer network model that consists of two or more bitcoin investition per, where each computer in the network environment can share. This network makes it easy for users to transact directly without the need for services from third parties.
The elements of Bitcoin are the existence of a peer-to-peer network, blocks, blockchain, and miners. The peer-to-peer network in Bitcoin allows users to transfer a certain amount of Bitcoin value, these transactions are stored in files called blocks, these blocks are intertwined with each other to form a block chain called the blockchain, and miners solve complex mathematical formulas. to prove ownership of Bitcoin.
Bank Indonesia responds to the existence of Bitcoin if it can be used, traded, or stored as an asset or a form of digital commodity by the people of Indonesia, but it cannot be used as a means bitcoin investition per payment because only the Rupiah currency is the only legal means of payment in Indonesia.
Bitcoin is the first implementation of the concept of cryptocurrency, which was first described by Wei Dai in The proposes of cryptocurrency is a new form of money that uses cryptography to control creation and transactions rather than using a centralized authority.
Cryptocurrency is a digital asset designed to function as a medium geld anlegen ohne risiko deutschland exchange that uses strong cryptography to bitcoin investition per financial transactions, bitcoin investition per, control the creation of additional units, and verify asset transfers Cryptocurrency is a type of alternative currency and digital currency. Cryptocurrencies use decentralized controls compared to centralized digital currencies and central banking systems.
Cryptocurrency is a virtual currency that circulates without being regulated by a particular central bank, is not “backed up” with gold as currency, and is not protected bitcoin investition per any particular country. Distribution and use through the internet network media. With this crypto many benefits are obtained without exchanging it for real money, the value of crypto prices has international standards so that the value is the same everywhere, the transfer time is very fast, and crypto is not owned by a particular company. Crypto is bitcoin investition per digital asset where transactions are carried out using bitcoin investition per online network. Crypto assets are virtual so if one wants to see what the physical form of this currency is, then the answer is no. The form is not like a physical currency issued by a bank and also not the currency of a country.
Investors can maximize asset allocation through a combination of risky assets to reduce high risk. Investors who have an aversion to risk tend to reject investments that are more likely to have speculative content. Investors who do not like risk consider risk-free investments or speculate on investments that have a positive premium.
Research related to virtual currency, especially bitcoin cryptocurrency, is still rarely done in Indonesia. However, the development of bitcoin cryptocurrency has recently begun so that further studies are needed to provide an overview to the public and policy makers regarding bitcoin cryptocurrency investment, bitcoin investition per. Some of the research results that have been carried out both domestically and globally can be summarized as follows:
Voskobojnikov et al. [11] identified and qualitatively analyzed 6, reviews pertaining to the user experience with top five mobile cryptocurrency wallets. They suggested that both new and experienced users struggle with general and domain-specific user experience issues that, aside from frustration and disengagement, might lead to dangerous errors and irreversible monetary losses. They reveal shortcomings of current wallet user experience as well as users’ misconceptions, some of which can bitcoin investition per traced back to a reliance on their understanding of conventional payment systems. Based on their findings, they provide recommendations bitcoin investition per how to design cryptocurrency wallets that both alleviate the identified issues and counteract some of the misconceptions in order to better support newcomers.
Hachicha and Hachicha [12] proved the efficiency of Markov Chain for our sample and the convergence and stability for all parameters to a certain level. On the whole, it seems that permanent shocks have an effect on the volatility of the price of the bitcoin and also on the other stock market. Our results will help investors better diversify their portfolio by adding this cryptocurrency.
Mikhaylov, A. [10] conclude that the cryptocurrency market has entered a new stage of development, which means a reduced possibility to have excess profits when investing in bitcoin investition per most liquid cryptocurrencies in the future. However, buying new high-risk tools provides opportunities for speculative income.
Igoni et al. [13] concluded that market capitalization and volume of digital currency did not constitute the significant variables of policy to influence the monetary policies in the South African economy, hence they operate independently. A decision to adopt and regulate digital currency operation or not in Nigeria does not affect. They recommend the Nigerian to embrace the digital bitcoin investition per in terms of regulations for tax advantage.
Le Tran and Leirvik [14] shown that the level of market-efficiency in the five largest cryptocurrencies is highly time-varying. Specifically, beforecryptocurrency-markets are mostly inefficient. This corrobo-rates recent results on the matter. However, the cryptocurrency-markets become more efficient over time in the period – This contradicts other, more recent, results on the matter. The reason is that they apply a longer sample than previous studies. Another important reason is that they apply a robust measure of efficiency, being directly able to determine if the efficiency is significant or not, bitcoin investition per. On average, bitcoin investition per, Litecoin is the most efficient cryptocurrency, and Ripple being the least efficient cryptocurrency.
Agosto and Cafferata [15] found that extremely rapid price accelerations, often referred to as explosive behaviors, followed by drastic drops pose high risks to investors. From a risk management perspective, testing the explosiveness of bitcoin investition per cryptocurrency time series is not the only crucial issue.
Rabbani et al. [16] identified that the sharia compliance related to the cryptocurrency/Blockchain is the biggest challenge which Islamic Financial Technology organizations are facing. During our review we also find that Islamic Financial Technology organizations are to be considered as partners by the Islamic Financial Institutions (IFI’s) than the competitors. If Islamic Financial institutions want to increase efficiency, transparency and customer satisfaction they have to adopt Financial Technology and become partners with the Financial Tech companies.
Hairudin et al. [17] indicated that public embrace of cryptocurrencies continues to lag as the masses currently show reluctance in embracing cryptocurrencies as a complement, let alone a substitute to fiat counterparts. Governments have also successfully defended their sovereignty in preserving legal tender status, structural seignior age and exclusivity. Market-based studies hint at consistent inefficiencies across the spectrum. The most promising areas of research for crypto-financial intelligentsia would be delving into establishing trial runs for central bank-backed cryptocurrencies.
Grobys et al. [18] indicated that a variable moving average strategy is successful bitcoin investition per using the 20 days moving average trading strategy. How to begin investing in cryptocurrency, excluding Bitcoin the technical trading rule generates an excess return of % p.a. after controlling for the average market return. The results suggest that cryptocurrency markets are inefficient.
Amsyar et al, bitcoin investition per. [19] concluded that cryptocurrency has the disadvantage of not having the authority responsible for dealing with all problems that occur in all transactions, and money laundering crimes also often occur, this is a challenge for how to utilize cryptocurrency and blockchain technology in the current era of globalization.
Vaz de Melo and Fluminense [20] indicated that indicate that the strength of dependence among the crypto-currencies has increased over the recent years in the cointegrated crypto-market. The conclusions reached will help investors to manage risk while identifying opportunities for alternative diversified and profitable investments.
Tu et al. [21] detected two sudden jumps in the standard deviation, in the second quarter of and at the beginning ofwhich could have served as the early warning signals of two major price collapses that have happened in the following periods. They propose a mean-field phenomenological model for the price of cryptocurrency to show how the use of the standard deviation of the residuals is a better leading indicator of the collapse in price than the time-series’ autocorrelation. Their findings represent a first step towards a better diagnostic of the risk of critical transition in the price and/or volume of crypto-currencies.
Fang et al. [22] summarized the existing research papers and results on cryptocurrency trading, including available trading platforms, trading signals, trading strategy research and risk management. This paper provides a comprehensive survey of cryptocurrency trading research, by covering research papers on various aspects of cryptocurrency trading (e.g., cryptocurrency trading systems, bubble and extreme condition, prediction of volatility and return, crypto-assets portfolio construction and crypto-assets, technical trading and others). This paper also analyses datasets, research trends and distribution among research objects (contents/properties) and technologies, concluding with some promising opportunities that remain open in cryptocurrency trading.
Dro&#;d&#; et al, bitcoin investition per. [23] found that Easy ways to make money on the internet particularly significant result is that the measures applied for detecting cross-correlations between the dynamics of the BTC/ETH and EUR/USD exchange rates do not show any noticeable relationships. This could be taken as an indication that the cryptocurrency market has begun decoupling itself from the Forex.
Panagiotidis et al. [24] found that a significant interaction between bitcoin and traditional stock market. The increased impact of Asian markets on Bitcoin compared to other geographically-defined markets. Two years after the Chinese regulatory interventions and the sudden construction of CNY’s share in bitcoin trading best website buy bitcoin uk et al. [25] found that bitcoin can be considered as a hedging tool against global geopolitical risk.
Krafft et al. [1] found that individual “buy” actions led to short-term increases in subsequent buy-side activity hundreds of times the size of our interventions. From a design perspective, we note that the design choices of the exchange we study may have promoted this and other peer influence effects, which highlights the potential social and economic impact of HCI in the design of digital institutions.
Panagiotidis et al. [26] found that search intensity and gold returns emerge as the most important variables for bitcoin returns.
Koutmos [27] found that the contribution of return shocks to transaction activity is quantitatively larger in magnitude.
Demir et bitcoin investition per. [28] found that bitcoin can serve as a hedging tools again uncertainty.
Balcilar et al. [29] found that non-linear relationship between bitcoin returns bitcoin investition per trading volume. The trading volume cannot help to predict the volatility of returns at any point of the conditional bitcoin investition per [30] found that bitcoin return significantly inefficient but in the process of moving towards an efficient market.
Based on the research objectives, the researcher wants to compare the returns obtained from bitcoin currency and others investment instrument, namely stocks, exchange rates and gold to see how rate of return bitcoin investition per on bitcoin currency. Besides measure rate of return on bitcoin currency, the researcher also measures the risk of bitcoin investition per currency investment. Standard deviation of bitcoin currency employee to measure the risk of the investment. Thus, the statistical hypotheses and research hypotheses used in this study are as follows:
Ho1: μ&#; = μ&#.
Ha1: μ1 ≠ μ2.
Ho2: μ1 = μ3.
Ha2: μ1 ≠ μ3.
Ho3: μ1 = μ4.
Ha3: μ1 ≠ μ4.
Ho4: μ&#; = μ2 = μ3 = μ4.
Ha4: At least one of the average returns are not equal.
where:
μ1 = average bitcoin returns.
μ2 = average exchange rate returns.
μ3 = average gold returns.
μ4 = average stock returns.
While the research hypothesis developed in this study is as follows:
H There is no difference between the bitcoin returns and the exchange rate returns.
Ha1: There is a difference between the bitcoin returns and the exchange rate returns.
H There is no difference between the bitcoin returns stock and the gold returns bitcoin investition per There is a difference between the bitcoin returns and the gold returns.
H There is no difference between the bitcoin returns and the stock returns.
Ha3: There is a difference between the bitcoin returns and the stock returns.
H There is no difference between the bitcoin returns and the others investment instrument.
Ha4: There is a difference between the bitcoin returns and the others investment instrument.
3. Methodology
This study compares the return and risk of bitcoin, stocks, gold and the rupiah exchange rate. This research is a type of quantitative research using secondary data. Secondary data used in the study were obtained from www.oldyorkcellars.com [31]; for bitcoin and share prices, bitcoin investition per. Gold prices were obtained from www.oldyorkcellars.com [32]; Rupiah exchange rate is obtained from bitcoin investition per [33]. The research period from to used monthly data or observed data.
The return calculation uses the formula for the difference from the current value to the previous value divided by the value in the previous period. In general, the return formula can be written as follows:
E1
where:
Rt = the return at period t.
Rt-1 = the return at period t−1.
In this study also measure risk of each investment instruments. Standard deviation is employed to measure the risk of investments. Standard deviation to measure how far the deviation from the average of each investment instruments. The higher standard deviation value means the higher risk of the investment. Here the formula to measure standard deviation (σ):
E2
where:
σ = standard deviation of investment.
n = number of observation.
r(s) = return of investment.
r = average of investment.
Table 1 shows the operational variables used in this study include investment instruments, bitcoin investition per, namely bitcoin, exchange rates, gold and stock.
4. Research Results
Statistical descriptions include the average, minimum value, maximum value and standard deviation of each investment instrument, namely bitcoin, exchange rate returns, gold returns and stock returns during the study period – Bitcoin’s return has the largest average of 18% compared with returns from other investment instruments. In addition, the standard deviation of bitcoin returns has the largest value of % compared to other investment instruments. The range of bitcoin returns between −% till %. Table 2 shows the descriptive statistics of the investment instruments studied.
| Instrument | N | Min | Max | Mean | Std. dev. |
|---|---|---|---|---|---|
| Bitcoin (μ1) | − | ||||
| Exchange Rate (μ2) | − | ||||
| Gold (μ3) | − | ||||
| Stock (μ4) | − |
Table 2.
Descriptive statistic.
Source: data processing,
The correlation matrix between investment bitcoin investition per can be found in Table 3. The highest correlation is obtained from the return stock and return exchange rate (−), bitcoin investition per. The more the stock return increases, the lower the return exchange rate will be. In other words, the stronger the rupiah exchange rate, the more the composite stock price index will increase. The strengthening of the rupiah exchange rate had an impact on increasing domestic economic growth so that investors invested heavily in stocks. Therefore, stock returns also increase when there is an increase in the rupiah exchange rate. Meanwhile, bitcoin does not show a correlation with other investment instruments which bitcoin investition per indicated by a correlation matrix value below 5%. This figure shows that the bitcoin returns are not affected by the others instruments investments returns namely exchange rate, gold and stock returns.
| Instrument | Stock | Exchange Rate | Gold | Bitcoin |
|---|---|---|---|---|
| Stock | 1 | |||
| Exchange Rate | − | 1 | ||
| Gold | − | 1 | ||
| Bitcoin | − | 1 |
Table 3.
Correlation matrix.
Source: data processing,
An overview bitcoin investition per the return fluctuations obtained from each investment instrument of stock return, bitcoin investition per, exchange rate return, gold return and bitcoin return can be seen in Figures 2–5. Each investment instrument shows different return fluctuations. The lowest standard deviation is the exchange rate %, while the highest standard deviation is Bitcoin bitcoin investition per. In other words, investment in bitcoin have the highest risk compared to the alternative investment instruments. The others investment instruments have low risk between % till %, bitcoin investition per. Investment in foreign exchange rate has the lowest risk compared to the others alternative investments, bitcoin investition per. Investment on gold and stock have similar risks around % to %.
The range of the largest fluctuation was obtained from the return on bitcoin investment, especially in the period to Inbitcoin returns reached the highest point where returns increased from 10–70%. However, the return drastically decreased to (−5%) entering It means the investment in bitcoin get the highest return and also the highest risk compared to the others instrument of investment.
The next test was to compare the returns between each investment instrument through paired sample tests, namely stock-exchange rate, stock-gold, stock-bitcoin, exchange rate-gold, bitcoin investition per, exchange rate-bitcoin and gold bitcoin. Table 4 shows the results of the paired sample test of each investment instrument.
| Instrument | Mean | Std. dev. | Std. error mean | t | df | Sig. |
|---|---|---|---|---|---|---|
| Bitcoin - Ex. Rate | − | − | ||||
| Bitcoin - Gold | − | − | ||||
| Bitcoin - Stock | − | − |
Table 4.
Paired samples test.
Source: data processing,
The results of the paired samples test of returns between investment instruments can be seen in Table 4. The results of the paired sample test between bitcoin and the others investment instruments shows significant level less than It means that is difference of return between bitcoin and the others investment instruments. The average means difference of bitcoin and bitcoin investition per others investment instruments around −%. Standard deviations show around 61% of investment on bitcoin, bitcoin investition per. It means that the highest risk of bitcoin investments.
Based on the results of testing paired samples wow money making professions wod return on investment between investment instruments and the explanation above, it can be concluded that the research hypothesis is as follows:
Ha1: There is a difference between the bitcoin and the exchange rate return (accepted at significance level ).
Ha2: There is a difference between the bitcoin and the gold return (accepted at significance level ).
Ha3: There is a difference between the bitcoin and the stock return (accepted at significance level ).
One sample test is conducted to prove whether or not there are differences between the investment instruments used in this study. The one sample test results show that bitcoin returns provide a very significant difference (α < ) compared to other investment instruments: exchange rate, gold and stock. The average return of stock, exchange and gold investment instruments.
Table 5 shows analysis of variance single factor for each investment instruments. The variance of bitcoin the highest () if compared to stock, exchange rate and gold returns (–). It means there us a big different between bitcoin returns and the others investment instruments.
| Groups | Count | Sum | Average | Variance |
|---|---|---|---|---|
| Stock return | ||||
| Ex-Rate return | ||||
| Gold Return | ||||
| Bitcoin return |
Table 5.
Anova single factor summary.
Source: data processing,
Table 6 shows analysis of variance to test hypothesis 4 whether there is significant level of the return. The result indicates that F calculation () is higher than F critical value (2,). It means there is significant different between bitcoin and the others investment instruments.
| Source of variation | SS | df | MS | F | P-value | F crit |
|---|---|---|---|---|---|---|
| Between Groups | 3 | |||||
| Within Groups | ||||||
| Total |
Table 6.
Anova single factor test.
Source: data processing,
Based on the results of the analysis of variance single factor test shows that there is a difference between the average return of all investment instruments. Thus, the statistical hypothesis and research hypothesis (Ha4) is accepted at significant level or can be written down as follows:
Ha4: There is a difference between the investment instruments (accepted at significance level ).
Based on the average test between the research instruments used, bitcoin has a very significant difference in return compared to other investment instruments. Meanwhile, stock investment instruments, bitcoin investition per, exchange rate and gold have the same average return.
5. Conclusions
Based on the research results discussed in the previous chapter indicate that the investment in bitcoin still promising. The price of bitcoin rapidly increase during the study – The rate of return of bitcoin investment is the highest compared to the other investment instruments: stock, exchange rate and gold, bitcoin investition per. Meanwhile, the bitcoin investment also has the highest risk compared the others investment instruments.
It can be concluded that bitcoin investment provides the highest return (18%) compared to other investment instrument returns. However, the very high return on bitcoin comes with high risk investment. The risk of investing in bitcoin is indicated by a standard deviation of 61%, bitcoin investition per, while the standard deviation of other instruments: stock, exchange rate and gold less than 5%.
Based on the results of the paired sample test, it shows that the average return on bitcoin shows a very significant difference compared to the others instrument. Meanwhile, the return on the others instrument: stock, exchange rate and gold show the same return.
For the investors who love risk, then the investment in bitcoin could be an alternative for an investment. The investment on bitcoin promise higher return compare to the other investment instruments. For the investors who are risk aversion, an investment on bitcoin doesn’t fit since this investment have the highest risk.
This research has practical implication for the investors who require high return. In the same time, the investors also have to bitcoin investition per the risk along the investment on bitcoin.
The other implication for government of Indonesia as policy maker on crypto currency. The crypto currency quite develops rapidly in this crypto world era. The role and regulation on crypto currency are needed to secure investors and economic growth.
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Submitted: May 15th, Reviewed: August 13th, Published: September 24th,
© The Author(s). Licensee IntechOpen, bitcoin investition per. This chapter is distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, bitcoin investition per, and reproduction in any medium, provided the original work is properly cited.
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