Research

Once upon a time …. Clay stones shards and finally coins. With the coin-monopoles came trust, with the government bonds the sheer size of the currencies. The Bitcoin was invented by digital pioneers and coders as an alternative currency, as an alternative way of keeping money safely. The Bitcoin was modeled to substitute gold and as a counter model to the “FIAT” currency and the associated national debt. Bitcoin was by design restriced in its quantitative development and in addition to that anonymized, because the technically feasible had to be made.

Hopes for an alternative to gold quickly came – one speaks of “mining” – that inspired the media! Unfortunately, just as fast the anonymous Bitcoin fueld as black money illegal businesses, such as extortion. The most obvious is the still spreading plague of crypto-trojans. But the difference in comparison to gold is, that anyone can build alternatives to Bitcoin and that is done every day. If you tried that with gold in experiments, you would probably create very radioactive elements.

To summarize: The bitcoin digging is artificially limited in a rather pointless technical way, a kind of self-pulling loop. The Bitcoin is a popular black money and an equally popular story in the media.

So why is the value of bitcoin increasing? Is Bitcoin a self-reference, a Ponzi scheme, like the tech bubble in the late ’90s, or the Dutch tulip bubble in the seventeenth century? Yes, because

The last Bitcoin miners even steal computing power or electricity to make a profit in mining, which otherwise would not be possible even in countries with cheap electricity like China.
The already existing Bitcoins enjoy demand money launderers, but this disappears as soon as the authorities stop the convertibility, as already seen with some Bitcoin enthusiastic banks or at Visa
and finally, the immensely growing demand from the public, who face a constantly limited supply.

That is precisely what can be demonstrated by comparing Bitcoin development and Google Trends analysis. The following graph shows the Bitcoin (black) and the demand for the search term on Google (red).

We therefore assume that the keyword request on Google for the search term “Bitcoin” has approximately a fixed relation to the demand for bitcoins. As a result, scientists may consider whether rather the rising Bitcoin price has increased the search demand on Google or the media writing about it. Realists would think that the media has the power to influence people.

The Bitcoin is thus the prime example of a liquidity-driven bull market. Because bitcoin does not reflect any economic value at all, it is the perfect scientific object to study a purely liquidity-driven hausse. The bitcoin is some kond of the placebo for anyone who feels, that the value of gold is not growing fast enough.

It can be considered that a decreasing demand on Google will be an early indicator of a decreasing demand for bitcoins. The price spiral for Bitcoins would go downwards as a vicious circle and opposite the way it has turned upwards since 2013. In addition the spread betting and CFD contracts of the various Brokers as well as the futures at the CBOE and CME in Chicago fuel the Bitcoin as firing accelerators, since their demand is catching up with Bitcoin only after a time lag.

A look at the details of the past six months would lead us to a Bitcoin forecast of $ 8,700 (instead of $ 14,439 as of yeasterday, January 9, 2018) for the next 2-3 weeks, provided Bitcoin follows the red line in the chart given as a forecast by Google Trends.

So – lets wait for it, but please do not write so much about it  😉

update (16.1.2018): updated chart, new forecast as of 15.1.2018 : target lowered to 6.700 USD

Sources: Google Trends, www.bitstamp.net