Since the launch in 2008, the phenomenon, cryptocurrency, has taken the financial world by storm. In just 10 years, the cryptocurrency market shot up, from zero to approximately US$400B. The market that started with Bitcoin has now more than 3000 cryptocurrencies. As of June 2021, the total market cap of cryptocurrencies is US$1,746,285,217,570, but this success came as a result of a lot of volatility. Bitcoin, alone, fluctuated from its peak of US$60,000 to around US$30,000 recently. Over time, investors observed this volatility and realized that a lot of money can be made through crypto investments. But to make smart choices, anticipating the prices is crucial.
To make things easier for novice and experienced investors, artificial intelligence is providing solutions for this volatile market.
AI and Sentiment Analysis
The stock market is also volatile. Yet, it is a tad bit easier to predict stock prices as compared to crypto prices. One of the reasons for that is the fact that cryptocurrency is still a new phenomenon. Unlike the stock market, crypto values do not exactly correspond with factors like cash flow and asset availability. Instead, a factor that does affect is sentiment.
Almost 90% of all crypto movement is linked to the herd instinct, which is when a majority of people think and act in the same way. News headlines, Reddit posts, and tweets navigate the direction of crypto prices. Using RNTN or recursive neural tensor networks, the sentiments of these texts can be analyzed to create an AI bot for cryptocurrency trading.
AI and Crypto Trading
Cryptocurrency markets trade 24/7, which means, at any given minute, there are active traders monitoring crypto prices. This generates tons of data for AI to analyze for systematic trading that uses back-data findings (collecting and analyzing historical market pricing) to predict future prices. Employing AI for crypto price predictions makes it reliable by eliminating the risk of human error while calculating, and makes the entire process faster.
Crypto trading firms like Endor, Signal, and platforms like CryptoHawk.ai are leveraging this capability of AI to provide their users with crypto insights. Endor portrays itself as the ‘Google for predictive analytics.’ Endor’s protocol ensures small traders also receive crucial insights about the market without them having to conduct an extensive analysis of their own. To sharpen the model for accurate prediction, the firm takes data related to the user’s activity and recycles it back into their model.
Signal deals with providing indicators and signals to novice traders in a user-friendly way that uses data gathered by AI. Its prediction market not only helps with accurate market predictions but also allows experienced traders and data scientists to monetize their ability by selling their analysis.
CryptoHawk.ai is an AI platform for traders who invest in Bitcoin and Ethereum. This platform uses deep learning and AI to analyze large data sets to spot relevant patterns, make better decisions, and generate precise predictions. Investors can simplify their decisions, reduce the risk of uncertainty, and exploit market volatility to make smart investments.
