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'Buy bitcoin with credit card' searches sparking bubble fears

CNBC logo CNBC 11/27/2017 Jeff Cox


The quest to find whether cryptocurrency bitcoin is in a bubble could be found on search engines, where one bubbly sounding term is on the rise.

"Buy bitcoin with credit card" is around its historic peak, according to Google Trends as cited by Nick Colas, co-founder of Data Trek Research and the first Wall Street analyst to take serious notice of the digital currency.

While the phrase is only about 3 percent of all bitcoin searches, it is on the rise.

The popularity and curiosity of using leverage to get in on the action comes as bitcoin's price continues to scale new heights. In another surge to the upside Monday, bitcoin rose past $9,600 in morning trade, a rise of nearly 7 percent in a 24-hour period and 17.5 percent over the past week alone.

"These bubbles tend to end in tears," hedge manager Ken Griffin at Citadel told CNBC in an interview Monday.

Colas sees the inclination to use credit to get in on the moves of a volatile asset as "a cautious note" about where sentiment is running.

"For those readers who think about transmission mechanisms between financial assets and the real economy, look no further. This is it," he said in his daily note for clients.

Other search trends show that bitcoin holds a solid lead in Google quests for digital currencies, even though it has a growing list of competitors. In all, 15 crypotcurrencies now have market valuations above $1 billion, according to CoinMarketCap. At $162.4 billion, bitcoin is more valuable than the next 70 or so competitors combined.

Colas said bitcoin "still holds a strong lead in terms of global attention in crypto-land."

Bitcoin also has come in from the shadows in terms of the attention it's getting on Wall Street. Investing heavyweight Michael Novogratz, head of Galaxy Investment Partners, thinks bitcoin will hit $10,000 before the end of the year, and Tom Lee at Fundstrat has a mid-2018 price target of $11,500, nearly double what it was in mid-August.

But Mitchell Goldberg, head of ClientFirst Strategy, told clients he's skeptical and sees the bitcoin craze as analogous to the dotcom bubble and a sign that "we've entered the final and stupidest part of the bull market."

Related video: Wall Street gets worked up about bitcoin.


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