The key to bitcoin’s next breakout may lie in Google search

The first analyst to follow bitcoin sees a very accessible way to track its next big move.

DataTrek Research's co-Founder, Nick Colas, said recently that the key is looking into Google search and wallet growth.

"By looking at the number of people who search for the word 'bitcoin' on Google, which has roughly a 60 percent market share of search globally, we get a pretty good sense of where the interest is," he told CNBC's "Trading Nation" this week.

"The data does show exactly the same price trends that we saw for the past 90 days," he added.

And, just like the latest search trends, the cryptocurrency's price has been deep in the doldrums. It's been trading in the $10,000 to $12,000 range, off sharply from its record price near $20,000 it hit in December.

"Bitcoin searches have really trailed off. So, the interest levels definitely show you where bitcoin has these big breakouts and then pullbacks," said Colas.

He points to more evidence to support his theory to the bitcoin boom between last Thanksgiving and December 17 — when search traffic saw a significant pick-up as bitcoin prices surged to a record of $19,843.

"Search trends skyrocketed after Thanksgiving here in the U.S. in November of last year — more than doubling in the course of just a couple of weeks," added Colas. "That incremental search for the term 'bitcoin' actually led to an incremental number of wallets being formed, a method by which people hold bitcoin."

But days later, bitcoin prices crashed, and so did searches for it.

Despite bitcoin's troubles, Colas, who owns a quarter of a bitcoin, doesn't think it needs a life raft. He points out that it's still trading higher than before Thanksgiving, and the technology makes a lot of sense long-term.

"From this point on, we just have to look for the beginnings of good news that will re-accelerate wallet growth to make the thing go higher," Colas said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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