Search index analysis: Bitcoin may be a "relative safe-haven asset"

Bitcoin search index analysis reveals that Bitcoin may be a "relative safe-haven asset."

Bitcoin has fallen from nearly $20,000 to the current $8,000, and Google’s search for “Bitcoin” has been declining. From 2016 to the present, the relevance of "Bitcoin"'s Google search heat and bitcoin price is 0.69. The global Bitcoin search index and bitcoin prices both reached their maximum in December 2017. But is the situation in different countries consistent?

We selected 20 countries for analysis based on geographical and developmental conditions. As you can see from the chart below, the “Bitcoin” Google search index for these countries reached a maximum of 100 at the highest bitcoin price in December 2017, and then the search index fell as the price fell.

Is the situation consistent after that? the answer is negative. The highest value of the Bitcoin search index in each country is 100. Now Nigeria has a search index of 76, ranking first in the world, which means that the search fever is only 24% lower than the highest point. Bermuda's search index is only 5, and the search fever is 95% lower than the highest point. Bitcoin search heat varies from country to country, and we try to analyze the causes of this gap.

The relationship between the exchange rate of the French currency and the search index is strong. The most recently reported countries with statutory currencies depreciating against the US dollar are Argentina, Turkey, and Venezuela. The Bitcoin search index is above average. From 2016 to the present, the bitcoin search index of Syria, Iran and Nigeria, which are other currencies depreciating, is also relatively high. Venezuela’s currency depreciation is close to 100%, and according to reports in February this year, the local bitcoin premium exceeded 40%, indicating that Bitcoin plays a role in local value storage.

The countries with higher CPI have higher bitcoin search index of Turkey and Nigeria than the global average, and Nigeria's search index ranks first in the world. It should be said that the Bitcoin search index has a certain relationship with the CPI. In the case of a very high CPI, the Bitcoin search index is relatively high; if the CPI is at a normal level, such as 5% or less, there is no correlation between the two.

There is also a certain correlation between broad money growth and currency depreciation and CPI. Nigeria, which has the highest bitcoin search index, has a broad money growth rate of more than 16%. However, the relationship between currency growth and the Bitcoin search index is not as good as the exchange rate change. The broad money growth rate of India and Russia is also above 10%, but the Bitcoin search index is near the middle value.

The correlation between GDP growth rate and Bitcoin search index is not strong. For example, Zimbabwe and the UK have huge growth rates, but their bitcoin search index is relatively close. However, Nigeria, Argentina, and Turkey have indeed had problems with GDP decline in recent years. Their Bitcoin search index is above average.

The economic freedom index has a certain relationship with the Bitcoin search index. Venezuela, Iran, Argentina and other economic freedom scores are lower, and the Bitcoin search index is relatively high. However, the bitcoin search index of Zimbabwe with low economic freedom is below the average, and the two are not one-to-one correspondence.

Similarly, Zimbabwe’s fragile country index is also relatively high, but the Bitcoin search index is below the average. Countries with higher vulnerability indices such as Nigeria, Venezuela, Iran, and Laos have higher bitcoin search indices, and there is a certain correlation between the two, but there are exceptions.

Both the Google Bitcoin Search Index and Bitcoin prices reached their highest level in December 2017, and the correlation between the two from 2016 to the present is 0.69. In our selected countries, the Google Bitcoin search index is the highest at the highest price, but the trend is very different. Through analysis, we find that the fragile country index, economic freedom, GDP growth rate, CPI, broad money growth rate, and currency exchange rate changes have an impact on a country's bitcoin search index. The correlation between the depreciation of the French currency and the Bitcoin search index is the best. In the countries we observed, all countries with more depreciation of the French currency have higher bitcoin search indices.

From the correlation analysis of the above Google search index, when some regions encounter large-scale currency depreciation and the national vulnerability index is high, Bitcoin provides a "relative safe-haven asset" option, and the macro environment is more stable. In economically developed regions, this perception of using bitcoin as a safe-haven asset will be relatively low. Therefore, Bitcoin is still a typical liquidity risk asset due to various factors such as its volatility and policy, but in some cases it can also be regarded as a relative safe-haven asset option.

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