Google Predicts Bitcoin Price Changes
August 13, 2018
The US National Bureau of Economic Research (NBER) has published a study which found out that markets with cryptocurrency circulation unlike conventional financial ones vary depending on user interest.
Contrary to the classic financial assets digital currencies show no response and don’t act in accordance with similar list of market factors which is commonplace for traditional financial instruments.
These factors include investor interest and market behavior and described by the NBER as “time-series cryptocurrency momentum at the daily and weekly frequencies”.
Yukun Liu and Aleh Tsyvinski, the authors of the study, state that despite public opinion, “the markets do not view cryptocurrencies similarly to standard asset classes”.
They compared digital currency revenues with that from traditional ones including euro, precious metals and took account of macroeconomic indexes like consumption growth. As a result, the authors concluded that true factors that really affect cryptocurrency cost come from quite different domain that they called as the measure of returns a day or week prior.
Actually rate growth per one, three, five or six days can be predicted given single day return while seven-days factor allows for predicting market behavior for the next several weeks.
It should be noted that the work took account of consumer activity in Google and Twitter. Findings showed that an increase in searches for cryptocurrency related words such as "bitcoin" foresaw a small increase of BTC's price during the next weeks.