Challenges finding Bitcoin Price Indicators
Keeping track of all of the Bitcoin price indicators can be challenging. Bitcoin’s historical data only goes back a few years and only recently has Bitcoin had sufficient interest to begin tracking price correlation. Since Bitcoin is backed by anything it makes forecasting price changes extremely difficult. Most of the indicators have been related to the public interest in Bitcoin or news releases regarding Bitcoin.
Bitcoin Price Indicators unlike those of traditional assets
Historically we have been able to track correlations between traditional assets like oil and the US Dollar which have an inverse relationship. Another inverse relationship would be between Gold and the US Equities Market.
The impact of News and Social Media
One of the contrarian indicators which is reported to be 95% accurate is the CNBC tweet on BTC price forecasts. Every bullish price forecast on CNBC can expect a downward move in the price of bitcoin. If CNBC has a bearish tweet, then this usually results in a rally. It seems like a stretch to argue a twitter indicator, but it is hard to argue with 95% accuracy.
Bitcoin and Google Trends
One of the most accurate indicators in the movement of the price of Bitcoin has been Google trends. Google trends indicate the most searched terms at this moment. As there I an increase in searches for Bitcoin and Bitcoin price there usually follows. This indicator is said to be 90% accurate. This indicator is a bit tricky in that sometimes it is a leading indicator and others it is lagging. The increase in search is usually determined by the news and the type of news would impact price. The announcement of Bitcoin Futures to be traded on the CME was a positivize news announcement while the closing down of crypto exchanges in China had a negative impact.
The validity and accuracy of these indicators will be tested in the near future as a google search for the term bitcoin has decreased by 75% this year and has hit a three-year low. Does this mean that bitcoin is doomed to remain in a bear market for the near future? Will the next negative CNBC tweet signal a turnaround in BTC price? Maybe in the near-term but as Bitcoin matures as asset class these indicators will fall in importance as more fundamental factors play a greater role.