If you want to know where the bitcoin price is headed, just ask Google. Datatrek Research’s Nick Colas, an early analyst to track bitcoin, suggested to CNBC that the key to unlocking bitcoin’s next rally is to observe Google search and the ensuing digtal wallet creation, both of which have been on the decline in January amid a bevy of negative developments (exchange and wallet hacks, etc.) The bottom line? Google searches for bitcoin and wallet creation for the cryptocurrency this month compare poorly with December results.
Colas is not the first analyst to make the connection, with ARK Invest’s Chris Burniske previously pointing to a BTC/USD exchange rate that clearly reflected Google search trends. Burniske referred to it as “a virtuous Satoshi cycle,” evidence for which traces back to at least August 2017. Incidentally, today, a Google search of “bitcoin” yielded me 341 million results. Meanwhile, Colas said to CNBC:
“By looking at the number of people who search for the word ‘bitcoin’ on Google, which has roughly a 60 percent market share of search globally, we get a pretty good sense of where the interest is,” adding: “The data does show exactly the same price trends that we saw for the past 90 days.”
Fewer people have been searching bitcoin, and that waning interest is being reflected in the bitcoin price, which is currently trading in the $10,000 – $12,000 range compared to nearly a $20,000 bitcoin price in December. Colas concludes that interest levels as determined by Google searches show definite support for bitcoin’s “breakouts” and “pullbacks.”
Santa Claus Rally
Need further proof? In the United States, during the Thanksgiving holiday through Dec. 17, Google searches for bitcoin were the catalyst for the creation of bitcoin wallets to store the cryptocurrency. Colas says search trends “skyrocketed” during the period, rising more than twofold in a couple of weeks alongside the bitcoin price, to nearly $20,000. Of course, the strength in the bitcoin price didn’t persist, and neither did the Google search demand, which showed a tapering off in the days following the bitcoin price high.
Another popular search term during the holidays was, “buy bitcoin with credit card,” which incidentally Discover has addressed of late, dashing cardholders’ hopes of trading bitcoin or any altcoin for that matter with their credit or debit card.
The reasons behind the weakening bitcoin search activity on Google are unclear, but the remedy could just be more positive developments out of the space, the details for which can be tougher to predict. “From this point on, we just have to look for the beginnings of good news that will re-accelerate wallet growth to make the thing go higher,” said Colas.