Google search volume can predict price movement of cryptocurrency, suggests researchers

National Bureau of Economic Research

The National Bureau of Economic Research, an executive paper operated by the American based Think Tank, shows that unlike traditional financial markets, returns and value movements in cryptoprocessing markets are a factor of the attention they receive.

Bitcoin

Economist

The paper prepared by Yale University economist Yukun Liu and Aleh Tswinsky argues that since cryptocurrency have no contact with most of the stock exchanges and macroeconomic factors, nor are they exposed to the return of currencies or objects, the factors is completely different and affects their value movements and thus the returns.

Crypto World

Prediction

In particular, the paper prepares some standards that can be used to predict returns on coins like Bitcoin, XRP and atrium.

Paper argues that "high investor's attention predicts high future returns for a week-long horizon for bitcoin, a week's horizon for Ripple (XRP), and a 1-6 week horizon for the atrium. "

Financial Asset

Studies, which are based on the financial asset pricing model or financial model CAPM, say that a standard deviation in Google search for bitcoin shows an increase of 2.3 per cent over the next two weeks. Standard deviation is a statistical measure of the spread of data points. The higher the deviation, the data points (price in case of bitcoin) will spread.

Twitter Post and Crypto

Similarly, a standard deviation in Twitter posts for bitcoin shows an increase of 2.5 per cent in next week. The paper shows that the negative investor's attention adversely affects the prices of cryptocurrencies and thus returns. A standard deviation increase in Google search for 'Bitcoin Hack' decreases by 2.75 per cent in bitcoin next week.

The paper also found that returning to atheism has been reported to a certain degree in the stock return of an advanced microdevice (AMD) of the main manufacturers of special mining hardware.

"Our main conclusion is that in fact, cryptocurrency represents an asset class that can be evaluated using simple finance tools. Also, cryptocurauties include a property class which is basically different from traditional property classes "Liu and Tsvinski said.