Machine learning and artificial intelligence are actively used for the analysis of traditional financial markets (such platforms as DataTrading, Emma AI, Aidyia, Qplum, Estimize). It goes without saying that similar tools can also be applied in the sphere of crypto trading. So, what are the peculiarities of machine learning and AI on the crypto market? How can they boost its development?
High volatility not only raises the risks of crypto trading but makes it more profitable compared to any other investment forms. Prices fluctuate 24/7, which play in clever traders’ favor so that they can earn a steady income. To predict the trends of the fast-changing crypto market, one needs to process massive volumes of data. Here, artificial intelligence and machine learning systems come in handy.
Main advantages of AI and machine learning:
- Ability to analyze massive data volumes.
- Learning ability.
- High performance operating speed.
Currently, artificial intelligence is used in management of usual assets, shares and bonds estimated at billions of dollars. AI and machine learning systems are not widely leveraged on the crypto market. However, the process of their implementation into the DLT realm is in full swing targeting three directions.
AI in forecasting of the cryptocurrency market
The decentralized platform Augur for the creation of peer-to-peer prediction markets is based on the experience of network participants. Nevertheless, it doesn’t prevent the service from providing pretty close predictions in the decentralized universe. On August 16, Augur representatives announced the establishment of 1000 markets. Augur was developed by the non-profit organization Forecast Foundation to create accessible sources of public forecasting.
Unlike the abovementioned platform, NeuroBot takes not user experience but neural networks for a base. They help predict the dynamics of the cryptocurrency market. The system tracks exchange rate fluctuations, compare them and forecast changes of the forthcoming day. According to NeuroBot, the platform conducts a trend analysis within the accuracy of 90%. Its developers aim to improve the system by adding the option of technical and fundamental analysis.
Such platforms may make life of beginning traders who are to investigate all the relevant information considerably easier. Sure, prediction services should be taken with a pinch of salt but they can process the lion’s share of the market technical analysis and carry it out with high accuracy.
AI and machine learning in the analysis of market trends
Recognition of the trends of the cryptocurrency market requires the procession of multiple data. These are articles, blogs, forums and even comments below them. The blockchain- and AI-powered platform Senno carries out an automatic analysis and can bring about a result in a very short time. The system also leverages elements of machine learning.
Moreover, Senno entered into partnership with the app CryptoScanner that uses this AI-powered system to predict market trends and share results with traders helping them develop own strategies.
Quest for parties to close a deal
Lack of liquidity is one of the problems the cryptocurrency market faces. Wild exchange rate fluctuations make digital cash less attractive for business payments. The difference between demand and proposition is often made up for high commission imposed by exchanges and banks. Such platforms as TradeConnect that is powered by machine learning solve the abovementioned problems. TradeConnect leverages a party comparison protocol and helps a client find the right broker and bank, close deals directly and pay minimum commission.
Some companies are aimed at the creation of AI-fueled platforms that render services on the cryptocurrency market. For example, Money Token developed AI-powered Amanda to give credits to the members of the crypto community. This virtual assistant will be able to lend money on security of cryptocurrencies and serve an advisor from the moment of application filing until the full repayment of a credit.
Common use of the technologies is hindered by several aspects. Particularly, a lack of information since the entire cryptocurrency market is new if compared to traditional fund ones. Another reason is limited knowledge of AI due to lots of areas in this sphere the mankind has to investigate.
One more difficulty lies in the expensiveness of powerful and sophisticated equipment needed to calculate high-accuracy and complex algorithms of machine learning. Today, only heavyweights can afford it.
For the moment, one cannot say that artificial intelligence can recognize trends of the market in a more precise way than a human. Nevertheless, AI and machine learning would boost the process of the market technical analyzing as well as help traders and analysts predict exchange rate changes more precisely.