There’s nothing like a good sell-off to kindle interest.
Until November 14th, Bitcoin (BTC-USD) held a floor between 5750 and 6000 for the entire year, whether on an intraday or “closing” basis. After that threshold broke down, sellers overwhelmed buyers to the tune of new 52-week lows. The cryptocurrency now sits at a 13+ month low, a -69% year-to-date performance, and a price that is 78% below the all-time high.
Source: TradingView
After Bitcoin (BTC-USD) broke through its 5750 to 6000 floor, the event released a flurry of pent-up selling interest.
This latest plunge in Bitcoin sets up a fresh test of the relationship between Google searches and price. My ongoing observation has been that the combination of an extreme in price along with a surge in Google search interest translates into a top for price highs and a bottom for price lows. In other words, accompanying extremes signal an imminent change in price direction. If this observation holds up again, Bitcoin should reach a relatively quick bottom given the recent surge in interest in the cryptocurrency based on Google trends.
Interest in Bitcoin perked up on the day of the breakdown (November 14th) and is trending higher as the value of Bitcoin declines.
Source: Google Trends
While the recent increase in interest in Bitcoin breaks months of slumber, the interest is still nowhere close to its peak when the Bitcoin bubble was at its height.
The longer-term chart presents an interpretative challenge. The definitions of “extreme” and “surge” are subjective, so it is easy to argue that the current increase in search interest is insignificant when measured against prior interest levels. We will only know whether the current increase in interest is extreme enough to signal a bottom in hindsight. It is very risky to conclude here that a bottom is in place based on these data. For speculators, the better risk/reward play is to wait for some sign of buying interest to accompany the search interest; for example, a price high that surpasses the intraday high of a major sell-off day followed by subsequent buying interest (for more details see “Anatomy of A Bottom: Do Not Argue With Sellers – Celebrate With Buyers“).
