Algorithmic Trading of Bitcoin Using Wikipedia and Google Search Volume

Abstract

Trading and speculating on Bitcoin is difficult. With large daily price movements and frequent price crashes, implementing quantitative trading strategies can be challenging. This paper presents a simple trading algorithm which uses the volume of Wikipedia and Google Trends search terms to generate trading signals for buying or selling Bitcoin. By exploiting the collective interest in Bitcoin as measured by search volume, findings suggest that highly profitable trading strategies can be constructed that avoid market crashes. The strategy based on the“Bitcoin” Google and Wikipedia search terms generates a cumulative return of 9418.04% and 3549.05% respectively.

Keywords: Bitcoin, Big data, Cryptocurrency, Trading Strategy

JEL Classification: G10, G11