Analytics reveals some interesting things about cryptocurrency

5 July, 2019

Analytics are all the rage these days. If you are running a business and not utilizing analytics, you are behind the times. So it should be no surprise that people who follow and invest in cryptocurrencies make use of the latest analytics to guide their decisions. It turns out analytics reveals some interesting things indeed.

For example, did you know it is possible to use statistics from Google to determine, by location, who is most interested in Bitcoin? By looking at the terms being searched and the click through rate for each result returned in Google, you can pretty much figure out where people are most interested in cryptocurrencies like Bitcoin and Ethereum.

None of this should be surprising given the technological world in which we live. Just think about it. Today we have access to an unlimited amount of information. Virtually nothing we want to know is out of reach. Compare that to the world our parents and grandparents grew up in, a world in which so much was left unknown because resources were more scarce.

Perhaps that's why alternative monetary systems never really took off prior to the information age. It's not that people were not looking for them (people have been bartering for centuries); it is more that they didn't have the technology to make their dreams reality.

Most popular cities for cryptocurrency

Just to show you the depth of the analytical data on cryptocurrencies, let us talk about those Google searches to identify where digital coins are most popular. Google Trends data shows that searches for Bitcoin and related topics is now at a 17-month high - at least that is according to data updated on 29 June 2019.1 Note that Google searches are used as one of the factors in measuring interest in cryptocurrencies.

When you break down the data and look at the seven days leading up to 29 June, you discover that most of the Google searches came from Brazil's Sao Jose dos Campos. Another Brazilian city, Caxias do Sul, came in second. Other cities in the top 10 include Nigeria's Benin city and the California's Larkspur, San Francisco, San Jose, and Sunnyvale.

It is hard to draw any real conclusions from the top 10 list over a seven-day stretch, so let's go out 30 days. The longer span delivers quite different results. Rather than Brazil coming in first place, Bitcoin internet searches were most popular in Lagos, Nigeria. Lagos was followed by Munich, Vienna, Los Angeles, and Yonkers, New York.

Expanding the data points more toward Nigeria in terms of consistency. It also shows more interest in the U.S., particularly in California. What is interesting is that the two European cities made the top 10 over the 30-day term but not the seven-day.

What it all means

Analytics is an important part of running any business in the modern era. But to make it work, you have to know how to interpret and use the data. Cryptocurrency analytics demonstrate this very clearly.

Looking at Bitcoin as investment, it's critical to remember that time is always the most important factor in determining the worth and value of a particular asset. This is why the most experienced investors frown on day trading in favor of a more consistent, long-term approach.

With that in mind, looking at a seven-day term doesn't do us a whole lot of good. In such a short amount of time, lots of people can come and go on the cryptocurrency front. Casual investors may search Bitcoin on Google during a week when prices are particularly volatile. Whether or not they actually invest is another question.

A 30-day snapshot is more consistent with how investors analyze assets. They want to see an asset's performance over 30 days, 90 days, six months, and a year. They will search accordingly. So the longer the search term, the more it tells us about who is interested in Bitcoin (or any other cryptocurrency for that matter) as an investment.

Interest in Nigeria

So why is Nigeria near the top the list for both the 30 and 7-day terms? There could be lots of reasons, but it's a safe bet that Nigerian investors are paying attention thanks to government action being taken against cryptocurrency fraud.

Bitcoin and a number of other digital assets are doing very well in Nigeria right now. Unfortunately, so are fraudsters. A big problem there at the moment lies at the feet of an Estonian cryptocurrency firm that has been accused of stealing millions of dollars worth of assets from customers by arbitrarily closing their accounts.2

The issue is big enough that Nigeria's United Global Results for Peace charity has filed an official petition with the country's financial watchdog calling on them to investigate the Estonian company's business dealings. Regulators have said they will take a look at the company after having received the petition.

This kind of news sparks interest. That could explain why Nigerians are running lots of internet searches on Bitcoin.

Making money on Bitcoin

Investors in Nigeria may be following Bitcoin news hoping to learn what happens to that Estonian company now under investigation. Motivations may be entirely different in other parts of the world. Perhaps interest in the Silicon Valley is more about investment profitability than fraud. How would you know? By looking at other data.

Recently released data from the website reveals something rather startling: in the 3830 days since Bitcoin's Genesis block was released in 2009, Bitcoin has been profitable on 98.2% of them. In other words, the data shows that Bitcoin was unprofitable on only 69 days during the last decade.

Does that surprise you? If not, you must be very familiar with most of the intricacies of trading Bitcoin. But for the casual investor who doesn't pay a lot of attention, such a stellar success rate of profitability might seem hard to believe.

No other investment has performed that well over the last 10 years. To be profitable on that many days over a 10-year span is impressive by any measure. However, not all is sunshine and roses. On the 69 days when Bitcoin was not profitable, the tendency was to lose - and lose big.

Remember that Bitcoin peaked in 2017 at just under $20,000. By the time it bottomed out months later, it was down to around $3,000. The absolute worst time for Bitcoin was from December 2017 through January 2018. That one period of time accounts for a good portion of Bitcoin's 69 unprofitable days.

Who is searching gains and losses?

It would be fascinating to go back and look at Google searches during those 69 unprofitable days. The data might tell us who is researching losses as opposed to gains. It might also tell us where investors most likely to buy during downturns are located.

For example, there is a well-known strategy in the investment world that involves buying assets during a downturn. The idea is to accumulate volume while prices are falling. When they finally bottomed out, the goal is to possess as much as possible so that you can start reaping the profits when prices rise again.

This is one of the ways Bitcoin whales make their money. They hang around and wait until something spurs a selloff. Then they swoop in and buy those coins as cheaply as they can. That is followed by sitting on the coins for as long as it takes for the price to start rising again. When higher prices reach what appear to be the next resistance point, they quietly sell and put the money into a stablecoin until the next significant selloff.

Tracking that sort of data might give us a better idea of where all of the Bitcoin whales are. We could then use that data to help us better understand what economic and political environments are most advantageous to Bitcoin investing.

Using data to your advantage

This post has discussed just two types of analytics applied to cryptocurrency trading. There are as many more statistics as there are traders. So what is the point here? It is to encourage you to use data to your advantage. Whether you are a casual Bitcoin holder or serious investor, you will find that data-driven decisions serve you well.

The thing about Data is that it doesn't lie. Data is what it is: cold, hard fact. What you do with it is entirely up to you. This is where understanding and knowing how to use it comes into play. Note that correctly interpreting data is not something you are going to master overnight. It is going to take some practice.

Find two or three cryptocurrency news websites you can follow. Then consume as much news as you can. Wherever you see data being spewed out, pay close attention to it. Write it down if doing so will help you remember. While you're at it, pay attention to what the experts say about that data.

The experts are not always right, but you can compare what they say to what the news reveals about the asset in question. With enough time and practice you will discover what sources of information you can trust. Then you can start using the data to form your own opinions.


1) Google Trends.

2) Coin Telegraph. Nigeria: Financial Watchdog Receives Petition Against Crypto Exchange Over Account Closures.