Search volume on Google for cryptocurrencies is decreasing ⚠️: Is a longer crypto break imminent now?

The search volume in the largest search engine in the world, Google, is not only queried by statistics fans. The key figures are now considered important benchmarks in many areas and can say a lot about trends or moods.

In the financial sector, analysts often use the volume of certain search terms to see how much demand there is for a product or what investor sentiment is at the moment. In the case of cryptocurrencies, search volume is often used as an indicator of rising or falling price predictions.

• In May 2017, the increased search volume for “Bitcoin” was followed four days later by the price doubling from USD 1,300 to USD 2,700.
• The scale from 0 to 100 is easy to understand and gives a clear picture of the search behavior of Internet users.
• Google distinguishes between the search volume of a keyword and a trend.
• Bitcoin, Ethereum, Dogecoin and Cardano occupy places 1 to 4.

Are Google search volumes suitable as leading indicators?

As early as mid-October last year, some SEO agencies reported a low for the search term “Bitcoin” in Google. That in itself would hardly be worth mentioning if it weren’t for the fact that Google has long struggled with advertising cryptocurrency content. There are now even official figures from the parent company Alphabet Inc. regarding search queries for Bitcoin and other cryptos.

According to Google Trends, global search interest in cryptocurrencies is at its lowest level in 5 years. Here is a chart comparing it to Bitcoin price.

Without an inquisitive crowd, there is no basis for a brilliant bull market. Instead, a longer… https://t.co/YHC1Rj2PLF

— Hoss (@hoss_crypto) September 3, 2023

But back to the value of Google searches as a leading indicator of bull or bear markets. Since August 03, 2021, companies have been allowed to place crypto advertising on the Google search engine. Accordingly, the developers have meaningful numbers on the search trend of users when it comes to Bitcoin & Co.

A study of National Bureau of Economic Research from 2018 already shows a connection with the Google search volume and the price of cryptocurrencies. At that time, the search volume on Google and the number of tweets on X, formerly Twitter, about certain cryptocurrencies were taken into account.

Further results of the study in detail:

• Search volume on Google and tweets on X influence market dynamics.
• Crypto returns can be predicted with momentum and investor interest.
• Proven factors such as mining costs have less impact than assumed.
• An increase in the value of cryptocurrencies is often followed by a price increase.
• On average, increased search volume for “Bitcoin” resulted in a 2.75% price increase.
• According to the study, the increased number of tweets with the hashtag “Bitcoin” on X, formerly Twitter, resulted in an average price increase of 2.5%.
• Low search volume and a falling number of tweets were almost always accompanied by a price decline, the study found.
• Keyword combinations with negative connotations, such as “Bitcoin Hacks”, also have a negative impact on the market.
• Cryptocurrency specific factors not explainable with traditional models.

We love cheap #Bitcoin pic.twitter.com/zm9dYtxE6P

— The ₿itcoin Therapist (@TheBTCTherapist) September 3, 2023

Are Google Searches Showing Current Crypto Market Sentiment?

Typically, asset prices are influenced by the following factors:

1. supply and demand
2. Regulatory processes and requirements
3. market volatility
4. acceptance and dissemination
5. media reports
6. market mood

In the case of cryptocurrencies, the order does not have to be followed, even if the factors are correct. As the NBER study showed a few years ago, market sentiment and social media play a bigger role in upcoming bull or bear markets. Sentiment analysis as on yPredict available, give an indication of the mood among investors.

If you take the current declining figures from Google and the mentions of the well-known altcoins or meme coins on X, formerly Twitter, then everything points to a longer-term sideways movement. Bitcoin’s volatility index has also decreased, indicating rather calm market conditions. The sentiment analysis measures these and other indicators and thus draws on a valuable tool for investors.

As the latest numbers from Coinglass show, the volatility index is at an all-time low and appears to have been unfazed by the bitcoin price, especially over the past two years.

The analysis of market trends and market sentiment gives investors more information than simply looking at search volumes. Possible reasons for the declining interest in the term “Bitcoin” in Google could be:

• Holiday time, many users had more important things to do than worry about Bitcoin
• High number of HODLers who don’t care what the Bitcoin price is doing in the short term
• Calm before the storm, everyone is waiting for the approval of the Bitcoin ETFs in the US
• Little activity in the crypto market in general
• No bad news from the crypto sector to worry investors
• FOMO is currently primarily aimed at the meme market
• Increased knowledge of how cryptocurrencies work, fewer unanswered questions

Create your own Bitcoin predictions with yPredict

Many investors are interested in the short- and medium-term potential of an asset. Along with analytics and trading tools like those at yPredict, studying market sentiment can be a valuable complement to proven leading indicators.

Favorable market sentiment does not always automatically translate into positive market conditions. A strongly positive or clearly negative mood is not automatically answered with the corresponding opposite, i.e. a bull run or a bear market.

With yPredict Investors can analyze sentiment to identify potentially profitable assets and predict possible price movements. Relevant social media pages provide information on what investors and the community think about a specific asset. For example, Wall Street Memes already has more than 1.1 million followers of the financial market-related memes.