Disclaimer: The Crypto Regs and Taxes Blog recommends that you use your own research, not AI information, to make the final decision on your investments. AI software can be a great help in identifying potential crypto gains. However, human interaction is best for the final decision.
Cryptocurrencies continue to be an extremely fascinating phenomenon today. Having quickly achieved popularity and becoming extremely popular, digital coins continue to be an extremely profitable investment tool, capable of generating huge profits when investing in these assets over time on cryptocurrency exchanges or when investing in these assets.
There is a sharp rise in customers' interest in digital currency exchanges, where savvy traders can identify a profitable pattern and seize on it quickly. Such trading platforms dealing with Bitcoin, altcoins, satoshi to USD, and other cryptocurrencies give the opportunity to benefit by manually taking positions after studying the market, analyzing charts of prices, and studying the data of various technical indicators. However, the 21st century has enabled gaining from crypto-trading via automated mode through special crypto robots.
When a fragment is rapidly growing, such as the crypto market, it is common to automate exchange interactions. Brokers with coding skills and programming knowledge can create their own crypto robots or cleverly improve existing Expert Advisors to facilitate the exchange of advanced coins effectively. By exchanging cryptographic resources autonomously, the robot will bring its proprietor benefits.
Despite the fact that there are now plenty of automated trading tools on the internet, their actual quality is not known. As newcomers and inexperienced crypto merchants will likely be unaware of this potential danger, it is easy to make a mistake in setting up or running a less-than-ideal bot, which could lead to a rapid depletion of capital. It is important to exercise caution with these digital robots and undertake various tests on simulated accounts first.
Crypto trading requires you to be vigilant and choose your advisor very carefully. Otherwise, you may pick up a viral miner, lose money from your account, or unknowingly transfer coins to a fraudster's account!
A number of companies are actively using machine learning and artificial intelligence to analyze traditional financial markets (DataTrading, EmmaAI, Aidyia, Qplum, and Estimize platforms). However, some companies were forced to close due to factors we will disclose later.
Thus, similar tools can also be applied to crypto-trading. What is the uniqueness of using ME (Mathematical expectations) and AI (Artificial intelligence) in the cryptocurrency market, and how can they contribute to its growth?
Despite the high volatility of cryptocurrencies, crypto trading is also more profitable than any other form of investment because of the high volatility. The price fluctuates throughout the day, so traders can earn a stable income if they calculate correctly. In order to analyze the dynamically changing crypto market, artificial intelligence, and machine learning systems need to process large amounts of data.
AI and ME have the following advantages:
Analyzing large amounts of data is a skill.
Ability to learn.
Work speed is high.
Artificial intelligence technologies are used to manage billions of dollars in conventional assets, stocks, and bonds. Despite not being widely used in the crypto market, ME and AI systems are actively being deployed in the space, with three directions of development taking place.
Using artificial intelligence to forecast the cryptocurrency market
Artificial intelligence used in cryptocurrency markets
Auggur's decentralized platform for creating peer-to-peer prediction markets is based on the experience of network participants. Even so, Augur is able to predict cryptocurrencies fairly accurately. On August 16, Augur announced the creation of its 1,000th market. The Forecast Foundation is a nonprofit organization that developed Augur to provide public forecasting that is accessible.
NeuroBot, on the other hand, relies on neural networks, not user experience, to make predictions about cryptocurrency market dynamics. The system itself monitors exchange rate fluctuations, compares them, and predicts changes for the following day with their help. With their platform, NeuroBot claims to be able to analyze changes with 90% accuracy. Its creators plan to add technical and fundamental analysis in the future.
Those who have not yet had the chance to learn all the information about crypto trading can greatly benefit from such platforms. In spite of the fact that prognostic platforms cannot provide all the technical analysis of the market, they can conduct it with high accuracy and take the lion's share.
Using AI and ME to analyze market sentiment
It takes a lot of data to determine the sentiment of the cryptocurrency market. This includes articles, blogs, forums, and even comments under them. Senno, a platform based on blockchain and artificial intelligence technologies, conducts the analysis automatically and gives the result in a short time. Machine learning is also a factor in the system's analysis.
Senno has also partnered with CryptoScanner, an artificial intelligence app that predicts market sentiment and shares the results with traders.
Making deals with parties
One of the issues in the cryptocurrency market is a lack of liquidity. This, combined with significant exchange rate changes, makes businesses unattractive when making payments. To rectify this, TradeConnect provides its services using machine-learning technology: its side-matching protocol assists customers in finding the best broker and bank for them, allowing direct transactions with minimal fees.
The development of artificial intelligence platforms related to the provision of cryptocurrency services is a specialty of individual companies. As an example, Money Token created Amanda, an artificial intelligence assistant that will lend to cryptocurrency users. Using the virtual assistant, you will be able to apply for loans against cryptocurrency collateral and receive full support – from the moment you apply until the loan is paid off.
In order to avoid fraud, it is important to entrust your exchange API keys to trusted services with a good reputation. The API key is a kind of permission to use your account, including trading through it and withdrawing funds. The API is required for bots to work, but that is not a sign of fraud in and of itself.
Find out what security methods each platform uses before you begin using it. Keep two-factor authentication enabled to limit access to your account.
Cryptobots have the following advantages:
Trading round-the-clock. Robots do not need to sleep or do other things like humans do.
People make mistakes in trading operations and auxiliary ones, such as entering details.
Automatic execution of operations according to parameters set instantly.
Strict adherence to the plan and lack of emotion.
Paper trading or historical data can be used to test trading ideas.
Diversification and risk sharing are convenient.
Cryptobots have the following disadvantages:
If inexperienced users choose an unsuccessful or outdated cryptobot strategy, they will lose.
Fraudulent projects are abundant. Don't be fooled by promises of hyper profits.
As opposed to the common misconception, the bot should be monitored, adjusted, and maintained.
Low-quality bots are usually new and raw projects, so choosing proven and 100% debugged platforms is better.
Even a properly configured bot does not guarantee profits. There are many factors that can influence earnings and prices.
The advantages of automated cryptocurrency trading using artificial intelligence
While MT-Gox was flourishing, it actively used special crypto robots called Willy, which manipulated BTC values. In 2012-2014, when the cryptocurrency market, and all decentralized money, was not very popular or well-known, this trading robot caused bitcoin prices to rise and then fall. This was the first Bitcoin bot to do so.
Due to the current development of the crypto industry, bots cannot be used to manipulate the price of decentralized coins in this manner. In most cases, robots are used to automate trading on exchanges since they offer a number of advantages to speculative activities carried out by crypto bots, including:
Traders do not have to constantly monitor the virtual currency market and calculate when to open positions;
Crypto robots eliminate fear and emotional state from trading decisions when trading digital assets. The majority of novice crypto-traders lose their deposits because of psychological and emotional instability as well as failing to follow their own trading strategy rules;
Cryptocurrency bots are able to identify chart patterns, candlestick patterns, direction of quotations, and trend reversal points that are often invisible to traders;
Well-tuned trading robots analyze charts more effectively, make more efficient trades, and find the best entry points.
Automated cryptocurrency trading has many advantages that can help any trader, and the above qualities are just a few of them.
The Bottom Line
A number of limitations prevent the widespread use of AI technologies. Due to the fact that the cryptocurrency market is relatively new compared to the traditional stock market, human knowledge of AI is often limited by the amount of information that humanity has.
Moreover, sophisticated machine learning algorithms require powerful, sophisticated computing hardware that only giant companies can afford. However, all these difficulties can be overcome by learning and strengthening AI and ML fundamentals from any decent AI course.
The quality of a cryptobot is determined by the correlation between its efficiency and real value. Bots used for trading cryptocurrencies on exchanges must be stable in their performance.