Bitcoin Price & Google Trends

This post was originally published on April 16, 2019, and sent to Messari Pro subscribers.

There’s long been a correlation between “Buy Bitcoin” Google trends and the market price of Bitcoin. The more people who search “Buy Bitcoin”, the greater the potential demand for the asset. The price rises as a result. It makes sense, right? WRONG. A look at the data shows it's now “Buy Bitcoin” that leads to price increases. Rather, it is price increases that lead to searches on how to “Buy Bitcoin”.

One simple way to perform this lead-lag analysis is to do the following:

1. Take the weekly “Buy Bitcoin” time-series data from Google Trends.
   
2. Take the weekly Bitcoin price time series from Messari.
   
3. Calculate the week on week % change for each of the two-time series.*
   
4. Shift every data point in the Bitcoin price times series by one period into the future (or into the past).