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A Google Search Might Be All You Need to Predict Bitcoin’s Next Breakout

A Google Search Might Be All You Need to Predict Bitcoin’s Next Breakout

Reading Time: 2 minutes by on January 31, 2018 Bitcoin, Blockchain, Commentary
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Nick Colas, DataTrek Research‘s co-founder, has depicted a rather simple way to track Bitcoin in anticipation of the next spike. While investigating Google searches for “Bitcoin” may seem an overly simplistic methodology, Colas was the first analyst to track Bitcoin diligently, and his opinions come highly qualified.

Ultimately, analyzing Google searches for “Bitcoin” and following wallet growth can give speculators an excellent overview of where sentiment is headed, Colas maintained.

Analytics for the layman

Speaking to CNBC’s Trading Nation, Colas said:

“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.”

“The data,” he observed, “does show exactly the same price trends that we saw for the past 90 days.” The cryptocurrency’s price is in the dumps at the moment, if one can forget the fact that it hit nearly $20,000 in December 2017, only to settle now between $10,000 and $12,000. According to Colas, these rebounds tie into the search trends.

Noting that “Bitcoin searches have really trailed off,” he pointed to the almost predictable highs and lows of online interest in the currency. “The interest levels definitely show you where Bitcoin had these big breakouts and then pullbacks,” Colas said.

It is apparent that there is a definite correlation between the late 2017 spike in Bitcoin trading and Google searches at the time. In a self-perpetuating cycle, once enthusiasm for a commodity picks up, more people show interest, and this displays easily in Google search results.

“Search trends skyrocketed after Thanksgiving here in the U.S,” he continued, “in November of last year, more than doubling in the course of just a couple of weeks.” While that seems a tenuous link to some, the reality is that an incremental number of wallets were created alongside the growing number of searches during the period in question.

The theory of the simple tool can thus be extrapolated into reality. In addition, less than a week after its high point, Bitcoin crashed, and searches diminished likewise.

The bull still wants out of the paddock

Colas discloses owning a mere quarter of a Bitcoin. He doesn’t anticipate Bitcoin’s substantial volatility to need rescuing, in spite of a heavy regulatory sentiment felt globally. An alarm has spurred legislative moves over the enthusiasm among the citizenry for a currency that hasn’t yet been clearly defined in many ways.

DataTrek’s co-founder also pointed out that amid the extreme volatility, it is worth noting that Bitcoin is trading higher than before November 2017 and that it had, in real terms, emerged from that period at a higher value. Stating that the technology (blockchain) made a great deal of sense in application over the longer term, he is genuinely optimistic that cryptocurrency, valuable as a tool and based on a supremely valuable construct, will continue upward going forward.

“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,” Colas said.

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