Bitcoin during COVID-19:Could Internet Searches Explain Its Performance?

The purpose of this note is to present a behavioral and computational analysis of the performance of Bitcoin (BTC) during the COVID-19 period 31.12.2019-31.03.2021. In order to quantitatively include a health fear index into our analysis, we employ a code which is based on the Google searches for terms related to COVID-19 (the higher the index, the more the fear due to the pandemic). Moreover, we examine if increased interest, as expressed with an increased number of internet searches for Bitcoin terms, has an impact on the performance of BTC. The empirical findings confirm our assumptions that the suggested fear index explains the negative impact of COVID-19 fear on the performance of BTC, and that the increased interest regarding BTC is associated with increases in BTC prices. The methodology and the outcome of our study could be useful to investors, practitioners and scholars whose intention is to examine the performance of financial markets/assets.