Nobody would have ever thought of it, but he is proving it. A policy advisor at the Dutch National Bank, Joost van der Burgt, has come out with new research. Van der Burgt compared the Bitcoin (BTC) price movement to the Google search for cryptocurrency. Guess what? His findings will shock you!
It seems that the Dutch economist established a nearly perfect correlation between the two variables. Surprisingly, the two maintained almost the same falls and increases until the BTC price began plunging in early 2018.
Burgt Explains Further
While discussing his findings with CNBC, van der Burgt said that whenever Bitcoin is in the news, whether positive or negative, the price reacts by aiming for the skies. In the interview he explained that the correlation between BTC price and the Google search for cryptocurrency were a perfect match up until the end of 2017. Van der Burgt attributed the change in the patterns to the introduction of the Bitcoin futures markets.
San Francisco Reserve Supports his Claims
Meanwhile, at the time, independent research published when the futures market was launched supports his claims. The research shows that the futures market pulled down the Bitcoin price, just as the economist posited.
Comparison with other Google Searches
When van der Burgt compared the Google search for gold and its price, no relationship was established. He said that when the public is informed about a cryptocurrency, it could help to push prices up. By creating awareness about the cryptocurrency and getting people to inquire about it, investors can make prices rocket.
Scare is also a Factor
On other factors that could have contributed to its crash, van der Burgt said it could be a “scare” not a “panic.” He pointed out that the BTC price movement can be related to the beginning of bubbles. However, the BTC price, he says, has fallen off the panic phase. To him, the bubble that popular economists like Nouriel Roubini normally use to describe the virtual currency could’ve burst.
In an April report, van der Burgt likened the experience in the cryptocurrency industry to Hyman Minsky’s financial instability hypothesis. The theory became popular during the global financial crises. It identifies five key stages of bubbles. According to hypothesis, all this can be characterized as “euphoria.” He said that Bitcoin could just represent genuine innovation, unlike what critics think. Bitcoin price fell from an ATH of $20,000 USD in January to about $7,000 USD today.
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