Economic Analyses: High-Yield Savings Accounts (HYSA) and Bitcoin … Given Posible Reduction in the Interest Rate by the FED

import yfinance as yf
import pandas as pd
from datetime import datetime, timedelta
import matplotlib.pyplot as plt
import requests
import json

# Function to load configuration from a JSON file
def load_config(file_path):
    with open(file_path, 'r') as file:
        config = json.load(file)
    return config

# Load configuration
config = load_config('config/config.json')

# Extract the FRED API key from the configuration
fred_api_key = config['fred_API_KEY']

# Function to fetch the current Federal Reserve interest rate
def fetch_fed_interest_rate(api_key):
    url = f"https://api.stlouisfed.org/fred/series/observations?series_id=FEDFUNDS&api_key={api_key}&file_type=json"
    response = requests.get(url)
    data = response.json()
    if 'observations' not in data:
        print("Error: 'observations' key not found in the response data")
        print(data)
        return None
    latest_observation = data['observations'][-1]
    return float(latest_observation['value']) / 100  # Convert to decimal

# Fetch the current Federal Reserve interest rate
current_fed_rate = fetch_fed_interest_rate(fred_api_key)
if current_fed_rate is None:
    raise ValueError("Failed to fetch the current Federal Reserve interest rate")

# Define potential reductions in the interest rate
rate_reductions = [0.25, 0.5, 0.75, 1.0]  # Reductions in percentage points

# Define the investment period (e.g., 1 year)
investment_period_days = 365

# Define the amount of money to invest
initial_investment = 9017.58  # $10,000

# Define the end date as today and the start date as one year ago
end_date = datetime.today().strftime('%Y-%m-%d')
start_date = (datetime.today() - timedelta(days=investment_period_days)).strftime('%Y-%m-%d')

# Fetch historical Bitcoin price data
btc_data = yf.download('BTC-USD', start=start_date, end=end_date)

# Calculate the returns from Bitcoin
btc_start_price = btc_data['Close'].iloc[0]
btc_end_price = btc_data['Close'].iloc[-1]
btc_return = (btc_end_price - btc_start_price) / btc_start_price

# Calculate the returns from the HYSA for different interest rate scenarios
hysa_returns = [current_fed_rate - reduction for reduction in rate_reductions]

# Calculate the final amounts for Bitcoin and HYSA
final_amount_btc = initial_investment * (1 + btc_return)
final_amount_hysa = initial_investment * (1 + current_fed_rate)
final_amounts_hysa_reductions = [initial_investment * (1 + hysa_return) for hysa_return in hysa_returns]

# Print the results
print(f"Initial Investment: ${initial_investment}")
print(f"Bitcoin Return: {btc_return * 100:.2f}%")
print(f"Final Amount if Invested in Bitcoin: ${final_amount_btc:.2f}")
print(f"Final Amount if Kept in HYSA: ${final_amount_hysa:.2f}")
for reduction, final_amount_hysa_reduction in zip(rate_reductions, final_amounts_hysa_reductions):
    print(f"HYSA Return with {reduction}% reduction: ${final_amount_hysa_reduction:.2f}")

# Plot the results
# Plot 1: Comparison with different interest rate reductions
labels_reductions = ['Bitcoin'] + [f'HYSA -{reduction}%' for reduction in rate_reductions]
final_amounts_reductions = [final_amount_btc] + final_amounts_hysa_reductions

plt.figure(figsize=(12, 8))
plt.bar(labels_reductions, final_amounts_reductions, color=['orange'] + ['blue'] * len(rate_reductions))
plt.xlabel('Investment Option')
plt.ylabel('Final Amount ($)')
plt.title('Comparison of Investment in Bitcoin vs. HYSA with Different Interest Rate Reductions')
plt.xticks(rotation=45)
plt.grid(True)
plt.show()

# Plot 2: Comparison without interest rate reductions
labels = ['Bitcoin', 'HYSA']
final_amounts = [final_amount_btc, final_amount_hysa]

plt.figure(figsize=(12, 8))
plt.bar(labels, final_amounts, color=['orange', 'blue'])
plt.xlabel('Investment Option')
plt.ylabel('Final Amount ($)')
plt.title('Comparison of Investment in Bitcoin vs. HYSA')
plt.xticks(rotation=45)
plt.grid(True)
plt.show()