2020, we have seen fluctuations in asset prices around the world, including
gold, stock and alternative assets such as Bitcoin. Although all assets have faced
heavy selloffs from investors seeking liquidity during the COVID-19 pandemic,
the prices of various assets have gradually recovered after the easing of lockdown
measures around midyear. Gold prices surged to a record high in August, while Bitcoin
prices rose to their highest level in two years and 10 months in the wake of the
US presidential election held in early November.
rise of asset prices after falling to their lowest point of the year during the
COVID-19 pandemic reflects the volatility or risk that may exist for returns on
investments. The more volatile the assets, the more important the timing of
buying and selling assets becomes. If statistical methods are used to calculate
price volatility for each type of asset, it is found that the prices of
Bitcoin, stock and gold are highly volatile compared to last year, with Bitcoin
more volatile than stock and gold.
to new investors, diversification in terms of returns and risks may not be
sufficient, because there are a wide variety of alternative assets in the
modern financial world. Taking Bitcoin as an example, besides the understanding
of Bitcoin’s characteristics, investors must also consider other factors as
well, in particular, governance and legal issues that differ in many countries,
reliability of the platform, investment fees and investment conditions, as well
as lower liquidity. Moreover, investors need to know their costs and risk
limits, to always keep in mind that there are no shortcuts for making profits
from investment and to not let greed and emotions cloud investment decisions.
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