Recent events on the most popular of the digital currencies – Bitcoin – have risen crucial questions about behaviour of its exchange rates. In this paper, the authors connect two phenomena of the latest years – digital currencies, namely Bitcoin, and search queries on Google Trends and Wikipedia.

Offering a study on their relationship, they show that not only are the search queries and the prices connected, but there also exists a pronounced asymmetry between the effect of an increased interest in the currency while being above or below its trend value.

Bitcoin – the most popular of the digital currencies – started the year of 2013 at levels of $13 per a Bitcoin
and rocketed to $230 on 9 April 2013, potentially creating an absurd profit of almost 1700% in less than four
months. Later the same year, the price soared even higher to $395 on 9 November 2013, which accounts for a
profit of approximately 2900% since the beginning of 2013.

Such behaviour cannot be explained by standard economic and financial theories – e.g. future cash-flows
model, purchasing power parity, and uncovered interest rate parity – in a satisfactory manner. In general,
currencies can be seen as standard economic goods which are priced by interaction of supply and demand on the
market.

This research looks at the macroeconomic variables of an issuing country or institution (or entity in general)
such as GDP, interest rates, inflation, unemployment, and whether or not these factors increase the search volume for an alternative, digital currency.