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  • Writer's pictureIshfaaq Peerally

What GOOGLE DATA tells us about BITCOIN ๐Ÿ’น

Bad day for the markets with the $SPX500 around 0.8% down. Our portfolio is doing a little better thanks to $DGE.L which is winning from a falling $GBPUSD . $PE is winning from the rise in $OIL prices. $TRV is also doing well today. The only disappointment is $SWKS . Wall Street didn't really like the earnings(I personally liked it).

What GOOGLE DATA tells us about BITCOIN ๐Ÿ’น

It is not Bitcoin $BTC which is the new gold $GOLD but data. That's why companies such as Facebook $FB and Google $GOOG are collecting so much of our data. But today, we are going to have a look at some data about Bitcoin and what this tells us about its future.

As an investor, I use Google Trends a lot. I look at what are people are searching for, I compare the popularity of companies. I also look for companies that people are interested in and analyze them and make videos or write articles about them. I recently decided to look at the Google Trends data on Bitcoin and there is something interesting about the results I've got. I will suggest that you watch the video so that you can see it for yourself. The chart for the popularity of Bitcoin as a search word on Google is very similar to the chart for the price of Bitcoin.

When Bitcoin prices reached a peak in January 2018, Google search for Bitcoin also reached a peak and when it crashed, the search for the word was also reduced and when the price recovered this year, it became popular again.

What does this tell us about Bitcoin? It means that Bitcoin is not a value producing asset being backed by any fundamentals but is going up only because people are buying expecting to be able to sell to other people who are themselves expecting the price to go even higher. You can try the same thing about any other stocks, you'll rarely such a correlation between the asset price and the popularity. Apple $AAPL stocks are usually popular when it is volatile and when there is a new iPhone. You may tell me that this is only a coincidence. There were certainly no Google before the 1990s but if you read about all speculative bubble from the Tulip Mania to the South Sea Company, all happened when people who do not usually invest were investing. Popularity is what fuels speculative bubbles.

I have to make a disclaimer here that I invested in Bitcoin and Ethereum $ETHEREUM in the past. I bought Bitcoin at $900 and sold at $19 000 and bought Ethereum at $28 and sold at $750. I got lucky with them. But I don't want anyone else to fall into this trap hoping to get lucky. You may get lucky if Bitcoin goes to $50 000, but how confident are you about that happening?

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