How to explain google trends vs BTC/USD ratio?

[szuetam]

How could we explain this spread between btc price and google trends.
Do you think that bitcoin is temporary overvalued?
Do you suspect correction?

PIC:

Hope you will understand what is what.
Blue is google trends, two other lines are mtgox and bitstamp USD prices.
Volumes of those two visible but hardly readable.

[Scott J]

That looks like a breakaway from relying on media hype and a move towards legitimacy to me

[smoothie]

Breakaway...nice. 

[yogi]

Trade volume is in agreement with Google trends.

[dancupid]

Because the Google trend is absolute whereas bitcoin price is cumulative.
The current value of bitcoin is an expression of all previous price activity - the google trend is just what happens each day.

[szuetam]

Trade volume is in agreement with Google trends.

Good remark.

[szuetam]

Because the Google trend is absolute whereas bitcoin price is cumulative.
The current value of bitcoin is an expression of all previous price activity - the google trend is just what happens each day.

I would belive if it was like that previously

[szuetam]

Trade volume is in agreement with Google trends.

That's not trade volume. That's MtGox volume. I see this mistake over and over again.

Tru its oversimplify now, do you know some webpage where it is posible to check cumulative volume of bigest exchanges?

[xxjs]

You might find a correlation if you look hard, but there is not an apperant reason. Think what happens if the hordes, having used the money for fun a few months, massively chooses to go all in.

[Walsoraj]

This has been talked to death. $/BTC leads Google Trends.

If you beat a horse long enough, it will eventually come back to life. Seen this many times.

[Walsoraj]

This has been talked to death. $/BTC leads Google Trends.

If you beat a horse long enough, it will eventually come back to life. Seen this many times.

Have you tested it—mathematically.

Cross correlation analysis is not that complicated.

I can divide by zero and don't need to test anything mathematically. Thanks.

[Walsoraj]

This has been talked to death. $/BTC leads Google Trends.

If you beat a horse long enough, it will eventually come back to life. Seen this many times.

Have you tested it—mathematically.

Cross correlation analysis is not that complicated.

I can divide by zero and don't need to test anything mathematically. Thanks.

I can multiply by zero and make everything equally meaningless.

That makes no sense. This is not an acknowledgement of your ability.

Leave the horse alone.

[chufchuf]

I've crossbred a penguin with a horse if it helps

[Walsoraj]

I've crossbred a penguin with a horse if it helps

It only makes the relevant equations more complicated.

[Tzupy]

Well, if I'd try to, I'd probably get some silent NaNs and spend a lot of time debugging. 

[szuetam]

Somebody, please tell me that I am not the only one who does cross correlation analysis...

Sorry, I cant, could you link me whot it is explained like for 5y old kid?

[Odalv]

Somebody, please tell me that I am not the only one who does cross correlation analysis...

Keep doing, I like yours analysis.

[Stephen Gornick]

How could we explain this spread between btc price and google trends.

The first time I learned about the word twerking I did what many others did and googled it.  

I've heard the word twerking hundreds of times since and occasionally have seen it occur but I've not once done a search on it in ever since.

So even though there is (presumably) more twerking occuring today than there was yesterday, the frequency of Google searching for twerking is down today versus yesterday.

So similarly, for Bitcoin, Google trends will spike when there is an influx of those who are becoming aware of bitcoin for the first time, but Google trends can drop even though the actual subject of the term is seeing an increase in activity.

But because financial speculation discussion (due to a rising exchange rate) is the primary reason people are learning of the term "bitcoin", the google trends will lag, not lead, the exchange rate.  Thus Google searching for the term bitcoin can drop significantly without the exchange rate falling as well.

[Walsoraj]

There is a strong correlation between number of people twerking and btc price. It is safe to assume causation at this point, imo.

[Walsoraj]

There is a strong correlation between number of people twerking and btc price. It is safe to assume causation at this point, imo.

Since the series contains a lot of information you can determine causation through finding a time-shifted correlation peak.

Gox leads Google Trend.

This has been long established.

some of your posts are perplexing. Are you a time-traveler? If so, what year are you from?