why the bitcoin bubble hasn't fully burst | CNBC

jaysabi

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Quote from: hugeblack on August 31, 2018, 08:18:56 AM

In short, this article talks about research by the economist Joost van der Burgt in the relationship between the price of Bitcoin and Google searches for Bitcoin. This diagram shows the relationship.

Quote

He then said that the reason of "deflated the bubble" was because of the introduction of bitcoin futures.

Quote from: https://www.cnbc.com/2018/08/31/this-chart-could-explain-why-the-bitcoin-bubble-hasnt-fully-burst.html

My take on it is that because of the introduction of futures, that might have deflated the bubble before it got to a level where it might burst completely,

Do you think there is a link/effect between Google searches for Bitcoin and price?
Do you think we will hear "form that media" about the continuation of this ~~bubble~~ for a long time?

Source: https://www.cnbc.com/2018/08/31/this-chart-could-explain-why-the-bitcoin-bubble-hasnt-fully-burst.html

Certainly there is a connection between bitcoin search queries and price, but it is undoubtedly price that affects the search queries, not the other way around. When the price is rising and the hype cycle keeps constant attention on bitcoin, there is going to be more interest and more searches for it. As the price decreases, interest wanes. People love getting rich, not losing money. Price appreciation drives engagement and price depreciation suppresses it. The author doesn't offer any evidence to support the notion that the price crash was because of the introduction of futures however, only noting that they happened at the same time. That's hardly evidence one caused the other.

Hydrogen

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Quote from: hugeblack on August 31, 2018, 08:18:56 AM

In short, this article talks about research by the economist Joost van der Burgt in the relationship between the price of Bitcoin and Google searches for Bitcoin. This diagram shows the relationship.

Quote

He then said that the reason of "deflated the bubble" was because of the introduction of bitcoin futures.

Quote from: https://www.cnbc.com/2018/08/31/this-chart-could-explain-why-the-bitcoin-bubble-hasnt-fully-burst.html

My take on it is that because of the introduction of futures, that might have deflated the bubble before it got to a level where it might burst completely,

Do you think there is a link/effect between Google searches for Bitcoin and price?
Do you think we will hear "form that media" about the continuation of this ~~bubble~~ for a long time?

Source: https://www.cnbc.com/2018/08/31/this-chart-could-explain-why-the-bitcoin-bubble-hasnt-fully-burst.html

....

A better explanation may be the lull in bitcoin transactions near the beginning of 2018.

More info:

Quote

After peaking at $411 million in September(2017), the amount of money the largest 17 crypto merchant-processing services received in the best-known cryptocurrency has been on a steady decline, hitting a recent low of $60 million in May(2018), according to research that startup Chainalysis Inc. conducted for Bloomberg News.

While the amount merchant services such as BitPay, Coinify and GoCoin received increased slightly in June(2018) to $69 million, it was still a far cry from the $270 million received a year ago, Chainalysis found.

https://www.bloomberg.com/news/articles/2018-08-01/bitcoin-s-use-in-commerce-keeps-falling-even-as-volatility-eases

I suspect there is one good reason why google searches are not a valid metric for measuring interest. Most will only google for trends like bitcoin once in their lives. Google searches do not reflect consistent enthusiasm, activity or interest. They measure that initial spark of curiosity. But tell little of whether that initial interest wanes or remains.

AFAIK there is no background for google searches being valid indicators for public interest in something. There is no precedent or history for it. And there isn't likely to be either due to the spurious and pseudoscience nature of the concept.

There was a thread made on this topic a few weeks ago:

https://bitcointalksearch.org/topic/bitcoins-use-in-commerce-is-falling-even-as-volatility-eases-4968875

Flor1982

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Obviously, it did not fully burst and it will never burst because there are lot of people that believe in Bitcoin existence. How will it fully burst if more and more countries are now adapting it and declared it legal?Bitcoin will just burst if nobody will invest and nobody will use this currency anymore in which it is very impossible to happen specially that regulation is very much effective.

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I think perhaps you can draw the relationship he is drawing in one direction but not necessarily the other. When a bubble is forming there is a frenzy of interest and new money and that would show in terms of searches. But just because there are less searches does not mean we have not reached a bottom. There is plenty of existing money to sustain the market and these people do not need to drive google searches for bitcoin because they are already well enough informed.

magneto

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There is a link between the amount of google searches for "bitcoin", and bitcoin price. And it's a strong, positive one.

The fact is that once prices go up, people will be more interested in bitcoin, especially those who are not into bitcoin yet but are somewhat intrigued by the idea of it all. That itself leads to them searching for bitcoin, as the markets are bullish and there is lots of action.

But it does not work in reverse. Bitcoin price movements are not the result of the amount of media or search interest held in bitcoin. Even though the bear market is not over and prices could dip more, this theory does not work out at all.

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Quote from: NeuroticFish on August 31, 2018, 09:23:20 AM

Economists don't understand deflationary coins. And if something behaves in a way they don't understand, they make up theories as colorful as the stories from the gypsy fortune tellers when they read your future.

And I think that this article is not about economics, it's rather speculation...

That's sooo true! The only reason deflation is bad according to economists, is that when the prices are going down, people are not motivated to buy anything, since they know the goods will cost cheaper then. Hell, if one really needs something, the price is not a very big isuue if one has the sufficient funds. People will still buy things they need, and that is what money is for anyway. This CNBC article seems useless, because it's hard to claim any specific correlations between the price changes and google searches. And what does it have to do with the 'bubble' bursting? Bitcoin futures market attracted people to the coin and cheered up btc users at that time, sure, but I don't believe the futures prices are affecting those of bitcoin. After all, those are just speculations.

warriorcryptobar

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When the most crypto adopted country in the world is the Philippines is 5m owning wallets out of 100m population, this is a bubble that has not had the mass adoption to classify a burst possibility. Enough people have to use it for it to burst in the first place.

The Sceptical Chymist

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Quote from: timerland on August 31, 2018, 08:39:30 AM

The thing is that I think he's trying to suggest that the google search trends are the indicator responsible for price movements.

And that's kind of odd. Makes you wonder if you might as well just watch the price charts to see movements, or if google searches somehow predict the movements before they happen. In any case, there's no way of telling why people are searching for bitcoin info on google or how that's going to affect the price.

This is why economics is somewhere on the science scale, in between sociology and physics. It still remains a soft science with economists trying to use scientific tools to dissect what amounts to human behavior. I don't know if I'd put much stock in this article or this economist's findings.

Quote from: hugeblack on August 31, 2018, 08:18:56 AM

He then said that the reason of "deflated the bubble" was because of the introduction of bitcoin futures.

It sounds to me like he's saying the introduction of the bitcoin futures market softened what could have been a much uglier decline--as if the bubble deflated slowly instead of popping and going to near zero.

Retty

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I like many others are a bit sick of the crap that is spewed by CNBC. Virtually every bullish prediction they make- the opposite happens and vice-versa! Cheesy

At the end of the day, its the people decide how much its worth and how much they are willing to pay for BTC, and as long as we have newcomers coming into crypto, the virus will spread, and then hopefully one day we are laughing about when Bitcoin was $20,000.

BrewMaster

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i have been hearing multiple cases of people trying to say the fact that the number of searches about bitcoin according to google has fallen then bitcoin must continue going down.
to these people i say your conclusion is like saying that because people are taking umbrellas outside it makes the skies come down with rain!

the fact is people are taking umbrellas out because it is raining not the other way around. similarly there is a lot of searches about bitcoin because its price has been shooting up. obviously everyone would be curious to see what the hell is this "thing" that was worth $7000-$9000 and now all of a sudden is worth $20000.

using it to explain "bubble" is even worse!

1Referee also pointed out a very note-worthy thing. the same people, specially CNBC has been calling bitcoin a bubble ever since it reached $1000. in fact there was similar charts being posted back then too. mostly it was comparison of 2017's $1000 with 2013's $1000-$1200 and they were all convinced that it is the same and bitcoin is in a bubble which will burst and price will go back to $200-$500

1Referee

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I'm getting a bit bored with all these "analysts" and "economists" thinking to know what happened last year after the event. Where were all these ball sacks before the bull run started? Oh wait, they were heavily speculating about Bitcoin to crash at $2000, then $3000, then $4000, and so forth. No one even mentioned the futures markets to potentially be THE bull run trigger at the time they were announced. It's always easy talking afterwards.

Also, CNBC is a trash outlet only out to shill that what the reporters there think is relevant (i.e. what coins they hold at that point). They are supposed to be unbiased under all circumstances, but they haven't done much effort to actually show that.

davis196

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The "Google searches influence the bitcoin price" theory is old and far away from the truth.
The amount of google searches about bitcoin just follows the bitcoin price movement,not the opposite.
I still haven't found an ecnomist that realises that simple fact.
By the way,we all know that the December 2017 ATH was caused by the bitcoin futures trading launch.

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I am not sure if we can say there is a relation between the Google searches and the price. Otherwise, it would mean people don't like Bitcoin Future so they stopped to search about Bitcoin and so the price declined.
It's just mean people were less interested, for whatever reason, at the time of the peak, the mainstream media was covering the Bitcoin topic at a big level

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Economists don't understand deflationary coins. And if something behaves in a way they don't understand, they make up theories as colorful as the stories from the gypsy fortune tellers when they read your future.

And I think that this article is not about economics, it's rather speculation...

timerland

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The thing is that I think he's trying to suggest that the google search trends are the indicator responsible for price movements.

What happens is that the price influences people's interest in bitcoin. With bearish sentiments like we're seeing right now in terms of prices moving down, it's no surprise that mainstream search interest in bitcoin is going down. It's not because of the search index going down that bitcoin prices are going down, it's the opposite way around.

Even though I think that this bear market has got some more to go, his economic reasoning here is flawed. Essentially he's trying to suggest that bitcoin has not reached its bottom because search interest is lower than the price index; but the search indicators are influenced by price in the first place.

hugeblack

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In short, this article talks about research by the economist Joost van der Burgt in the relationship between the price of Bitcoin and Google searches for Bitcoin. This diagram shows the relationship.

Quote

He then said that the reason of "deflated the bubble" was because of the introduction of bitcoin futures.

Quote from: https://www.cnbc.com/2018/08/31/this-chart-could-explain-why-the-bitcoin-bubble-hasnt-fully-burst.html

My take on it is that because of the introduction of futures, that might have deflated the bubble before it got to a level where it might burst completely,

Do you think there is a link/effect between Google searches for Bitcoin and price?
Do you think we will hear "form that media" about the continuation of this ~~bubble~~ for a long time?

Source: https://www.cnbc.com/2018/08/31/this-chart-could-explain-why-the-bitcoin-bubble-hasnt-fully-burst.html

Topic: why the bitcoin bubble hasn't fully burst | CNBC (Read 257 times)