How Artificial Intelligence Is Influencing Crypto
Artificial intelligence has seemingly permeated every industry. Current statistics show that when startups are involved with AI, they are able to attract 15-50% more funding than other technology firms. As a result, it makes sense as to why companies are interested in getting the technology on board. Of course, there are qualities that make technology more effective. For example, there should be a great deal of data so that it can implement machine learning.
When it comes to the cryptocurrency space, there is a question as to whether AI can provide the same support, especially in light of the exogenous factors in place. This may be changing though, where AI can be used for algorithmic trading that is powered by AI.
According to Danil Myakin, Squilla Capital’s co-founder,
“Human bias is almost impossible to eliminate. People trade on their emotions, often unwittingly. Data-based decision-making eliminates the noise that can cloud people’s judgment, preventing them from acting rationally, and focuses solely on the signal. Provided you have a large enough sample set, computers that have been trained using machine learning will constantly derive more accurate insights than humans. In recent years, this theory has been proven in every major financial market and it is now being applied to the crypto economy with equally convincing results.”
Within the cryptocurrency space, AI can be useful for automated trading, such as high-frequency trading (HTF). This type of trading functions on analysis of technical indicators ranging across various exchanges so that it can respond to market-moving trades. AI may also be useful to facilitate automated trading using API connected to leading exchanges. With this type of approach, traders can determine which indicators they want the software to use in the decision-making process, like either RSI or EMI, and the timeframe for execution. The AI will then conduct trades within these settings. A third capability is sentiment analysis, in which the technology can be used to look through social media to determine the community’s sentiment about certain projects.
Ultimately, artificial intelligence may have a purpose in certain areas within the crypto space. Designating the right projects is the key to unlocking AI’s potential.