ECON 1035 – Business Report

Executive Summary

In this report, we will analyse and evaluate the investment potential of Bitcoin, by comparing
with another high-profile firm listing on the Australian stock exchange: the Macquarie Group
Limited (MAC). Graphs such a histograms and line graphs are used as data in this report to
clearer identify trends of rise and fall in closing prices as well as weekly returns, in order to
give a more comprehensive analysis and to establish the outliers by using the Z-score for each
histogram with the -3 < Z < 3 formula. . The report also calculates and interpret the three aspects
of descriptive analysis for weekly return: location, shape and spread. Results is then calculated
by using hypothesis testing and 95% confidence intervals.

A conclusion of the strengths and weaknesses of Bitcoin will be concluded in the end of this
report, based on the data produced from our findings, in order to determine if it is beneficial to
invest in Bitcoin.

Introduction

Bitcoin is a cryptocurrency which is a decentralized digital currency where users can make
purchases or payment without a need for a central clearing authority which enhances market
efficiency.
In this increasingly digital world, some believes a secure, strong and globally recognised digital
currency represents the future of finance, while some are not idealistic about the future of
Bitcoin and cryptocurrencies in general.
In this report, we will determine if it is beneficial to make an investment in Bitcoin, by
comparing it with Macquarie Group Limited (MAC) using data from closing prices, past
weekly returns, 95% confidence interval, identifying the probability of a loss ,calculating and
interpreting the three aspects of descriptive analysis for weekly return as well as hypothesis
test to support our recommendations.
A Ministerial Brief will be included at the end of our report on the conclusion on our findings
and calculations.

Page |2
PART A
1.1 Weekly Closing Price of Bitcoin

BITCOIN Weekly Closing Prices

30000

25000

20000
PRICE ($AUD)

15000

10000

5000

0
11/3/2013 11/3/2014 11/3/2015 11/3/2016 11/3/2017 11/3/2018 11/3/2019
WEEKS

Figure 1: Bitcoin Weekly Closing Price

Figure 1 shows a line graph on the Bitcoin weekly closing price from 11th March 2013 – 8th
August 2019. The graph compares the relationship between the weekly intervals (x-variable)
and value of Bitcoin in $AUD (y-variable). The graph shows a constant movement from 11th
March 2013 – end of 2016 and then sees a strong bullish effect from January 2017 till
December 2017, which brought the price of bitcoin to a peak closing, at AUD$25986.55 on
11th December 2017.
After closing at its peak, the price of BIT touched onto its lowest point on 10th December
2018. However, BIT is still on the rise since then.

The main spike in price is from 6th November 2017 till 8th August 2019, where an increase of
193% in price was seen within a span of 22months. However, the fluctuation of the price is
very huge, with a price change of 141% between 21th Nov 2017 and 4th Dec 2017. Therefore,
the graph determined that Bitcoin has great profit margin but due to its large fluctuation, it is
unstable.

Page |3
1.2 Weekly Return of Bitcoin

Figure 2: Bitcoin Weekly Return Price

Figure 2 shows the weekly returns of Bitcoin as a histogram graph. It is observed that the
weekly returns graph appears to be symmetrical and hence, suggests being normally
distributed. Within the period of 11/3/2013 and 12/8/2019, it was found that among that there
were 146 weeks where weekly returns were in negative margins. In addition, there are 4
outliers we have found through the weekly returns for Bitcoin.

1.3 Descriptive analysis

Mean Median Mode Standard Standard Sample Range Skewness IQR
Deviation Error of Variance
mean
2.679 1.368 0 14.718 0.804 216.608 125.473 1.515 13.976
Table 1: Bitcoin’s statistics
Location The Mean of the bitcoin weekly returns is 2.679 and whilst the Median
is valued at 1.368
Spread The sample variance is 216.608, range is 125.473 and interquartile range
is 13.976.
Shape The skewness 1.515 and kurtosis 6.297.

Page |4