CNBC has reported on Friday, August 31, that Joost van der Burgt, a policy advisor for the Netherlands’ central bank, alleged that Google searches for the cryptocurrency are altering Bitcoin prices. According to the interview with CNBC on Wednesday, van der Burgt stated; “Every time Bitcoin was in the news, be it positive or negative, the price went up accordingly,” He also added to his statement, that until the end of 2017 the association between Google searches for Bitcoin and the cryptocurrency’s value was nearly a “perfect match”. Van der Burgt explained further that there might be a correlation between these two occurrences, considering the bitcoin futures markets also introduced in the same year. Google searches have also been compared by Van der Burgt with other attractive assets like gold to their value, but there was no correlation founded. He said the relationship between the public awareness about an investment and assets price is directly proportional, meaning it can increase the value to sky-high levels. “If the buzz is everywhere, it doesn’t matter exactly what the news is about… nobody wants to miss out and everybody’s trying to get a piece of it,” Van der Burgt continued.
This is known as the “euphoria” phase of a bubble, based on the economist Hyman Minsky’s financial instability hypothesis. Minsky’s theory became very popular during the global financial crisis. His theory has five stages of a bubble: displacement, boom, euphoria, profit-taking, and panic.
Bitcoin’s value fluctuation closely followed the initial stages of a bubble but fell back during the panic phase. According to Coindesk, currently, bitcoin is trading almost $7,000, a value well underneath the preceding December 2017 price, $20,000.
Van der Burgt stated; “It wasn’t really panic, it was more of a scare,” and he added; “Then again, maybe Bitcoin is different than anything we have seen before, and maybe a decade from now its market capitalization will be sky-high as it attains the status of a new global currency,”
Author: Berna Bayindir
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