Google searches can predict bitcoin price increases, study says

According to Coindesk, a recent study published by the National Bureau of Economic Research (NBER) shows that unlike traditional financial markets, the trends in the cryptocurrency market depend on the type of attention they receive.

Unlike other traditional financial assets, cryptocurrencies do not behave and react like traditional financial instruments, but are more like "crypto-specific factors."

These factors include investor attention and market momentum, referred to as “daily and weekly time series cryptocurrency momentum.”

Notably, the study, which combined data on consumer activity on search forums such as Google and social media sites such as Twitter, found that an increase in the standard deviation of searches for keywords such as “bitcoin” predicted a small increase in the price of bitcoin in the following weeks.

The report shows that, on average, a one standard deviation increase in keyword searches leads to a 2.75% increase in price. Similarly, a one standard deviation increase in the number of Twitter posts leads to a 2.5% increase in the price of Bitcoin. On the other hand, a one standard deviation increase in the term "Bitcoin hacker" predicts a small drop in the price of Bitcoin.