Bitcoin price tracks Google searches for the cryptocurrency as speculators fear missing out

Much of bitcoin’s startling rally was driven by so-called fear of missing out, say analysts, and this explains its recent slump in value.

Last year the digital currency saw its price increase by more than 1,000 per cent. It grew fourfold between October and mid-December when one bitcoin was worth over US$19,000, according to cryptocurrency-data provider CoinDesk. The price then fell back, and on Thursday was trading around US$10 000.

These price movements are closely correlated with the number of Google searches for bitcoin, according to calculations by consultancy Quinlan & Associates, who found that the price spike in late 2017 was preceded by an equivalent spike in searches for “bitcoin”.

“This shows that much of the price rise was driven by speculators’ fear of missing out, and now the price is falling those speculators are selling,” said Hugo Cheng, a consultant at Quinlan & Associates. “However, we do expect to see some resistance levels below which the price won’t fall without an external factor, or a sell-off by a large investor, for example the US$10,000 level.”

The relationship between the rapid rise and fall in bitcoin’s value and online activity has been working both ways; any sharp, sudden fluctuations provide good headlines for journalists, which in turn drive more online interest in the digital currency.