Unraveling the effects of google search on volatility of cryptocurrencies

Abstract

Although cryptocurrencies have garnered enormous public attention in recent times, extensive fluctuations in their prices have deterred prospective investors. Due to the
\n absence of a centralized valuation authority, the credibility of cryptocurrencies as a viable investment vehicle remains elusive. Building on attention theory, this study posits that prospective investors of cryptocurrencies are likely to search online for information before deciding whether to make a commitment. We hence investigate the effects of Google search on the return and risk of 268 cryptocurrencies over 181 trading days.
\n Results indicate that the Google Search Volume Index (SVI) of a given cryptocurrency
\n exerts significant and positive impact on its price and turnover.