Use Cases

5 Benefits of Using AI in the Cryptocurrency Market

In this blog post, let's take a look at the five ways in which artificial intelligence (AI) is revolutionizing the cryptocurrency industry.
Halime Yilmaz
5 minutes

5 Benefits of Using AI in the Cryptocurrency Market

The global cryptocurrency market is expected to grow and reach $1,902.5 million by 2028, with a CAGR of 11.1% from 2021 to 2028.

The rise of cryptocurrency is a fascinating phenomenon of our day. Digital currencies remain a very attractive investment tool, with the potential to generate enormous profits on cryptocurrency exchanges or when investing in these assets over the long term.

Despite their rising popularity, investing in cryptocurrencies is not without its challenges, one of which is the complexity of the technology involved. Given the development of AI and the proliferation of AI use cases throughout the financial sector, here are five ways AI can be used for cryptocurrency trading.

Significant financial institutions, including hedge funds, banks, pension funds, and family offices, join the cryptocurrency market daily. Typically, these companies use trading models that are significantly more intricate than those utilized by individual investors. The use of AI is no longer limited to corporations.

Bitcoin investment requires a high level of knowledge and diligence. As more data-driven resources become accessible, investors and traders increasingly turn to AI and machine learning to make sense of the markets.

As increasingly large financial institutions show interest in cryptocurrency, technologies like AI and machine learning prove to be very helpful. Cryptocurrencies' underlying blockchain technology means that AI can collaborate to address numerous issues. You can read our article by clicking here for further information about artificial intelligence.

So let's jump in and see exactly what's going on!

Cryptocurrency Market

What Is the Cryptocurrency Market?

Cryptocurrency, sometimes known simply as "crypto," is a generic term for a specific kind of digital asset that can be bought, sold, and traded in a completely safe manner thanks to cryptographic algorithms.

In contrast to government-issued fiat currencies, cryptocurrencies do not need a central bank or other monetary institution to issue and circulate funds.

But how does cryptocurrency work?

Blockchain is the underlying technology behind Bitcoin and most other cryptocurrencies; it provides an immutable record of transactions, and a means to verify ownership. Since it is possible to make duplicates of one's holdings and try to spend them twice, blockchains were developed to solve an issue inherent in earlier attempts to build solely digital currencies.

Depending on their function, cryptocurrency units can be called coins or tokens. Some are designed to be used as currency in digital marketplaces, while others function as savings accounts. Yet, others provide access to online niche activities like video games or financial services.

Let's jump into the impact of AI in the cryptocurrency market.

How Does AI Help with the Cryptocurrency Market?

Let's take a look at the five benefits of using AI and CV in the cryptocurrency market: 

BTC

Insight on Monetizing Cryptocurrencies

Bitcoin traders make decisions based on a wide range of signs. In the digital age, there is so much unstructured data that it can be impossible to make reliable signals by hand. Before analyzing a lot of data to learn about investments, the data needs to be clean and functional.

When data scientists and engineers use artificial intelligence to develop trading techniques, they can give traders accurate and up-to-date information about their platforms.

NLP can be used to classify and pull out data from a large dataset, like financial data, based on the currency's name, the document type, who created it, and more.

Data scientists can use AI to give traders and investors who are not tech-savvy accurate trading information in a dashboard or interface.

Select Trading Partners

One of the problems is that there is not a lot of money on the Bitcoin market. Due to their high volatility, digital currencies are not suitable for business payments. Sometimes, the difference between supply and demand is made up for by the high fees exchanges and banks charge.

To solve the problem, machine-learning platforms like TradeConnect are being used. Side-matching technology is used to help customers find the right broker and bank, and this lets them work directly with the broker and bank and pay the least amount of fees.

Filter Through A Huge Quantity Of Data

AI can make decisions based on a large amount of data, such as historical market data, articles, forums, and even social media comments. Using data analytics, investors can better predict and prepare for events that can change the market. This lets them make better decisions.

Analysis Of The Market Sentiment For Cryptocurrencies

Through sentiment analysis, AI and natural language processing can be used to figure out how people feel or what they think about a specific topic. Investors should keep an eye out for price increases and decreases based on how people think about digital currency.

The only way to know how the Bitcoin market feels is to collect and analyze a lot of data. This group includes print and electronic media, social networking sites, and stock discussion boards.

Using artificial intelligence, a large amount of data from the internet and blockchain can be handled, and sentiment can be checked in real-time.

The bitcoin market can be analyzed with the use of common types of sentiment analysis, such as:

  • Polarity: In a polarity study, the statements are looked at and labeled based on whether they are reasonable, harmful, or neutral. Analysts and investors will set the trend for similar information and labels to be looked at in the same way once the overall score has been taken into account.
  • Aspect-based sentiment analysis: Aspect-based view analysis puts data into groups based on the business or service and figures out how people feel. One way to do this is to look into customer feedback by placing a feeling with a result or service.
  • Tone and emotion: NLP can determine how a text makes you feel or what it sounds like. We can learn more by looking at the different kinds of feelings that come up.

Cameralyze provides the most precise and automated approach for identifying human emotions from facial expressions, including the universal expressions of happiness, sadness, surprise, fear, calmness, anger, and confusion, using artificial intelligence. Its easy-to-use platform can allow everyone to take advantage of AI technology in the cryptocurrency market. Start to use it for free!

The Capacity to Learn

It is possible to predict what will happen in the cryptocurrency market using neural networks and advanced AI. AI systems can watch and compare changes in the exchange rate and find patterns. They can then use this information to make accurate predictions about how the exchange rate will change in the future.

Extra Bonus

Considering the amount of accessible data stored on blockchains and the unpredictable nature of cryptocurrency prices, it is only natural to look to AI for assistance in making informed investment choices that are both profitable and low in risk. Robotic process automation (RPA), computer vision, machine learning, and natural language processing (NLP) are just a few examples of how AI can be helpful in cryptocurrency. Included below are just a couple of examples:

Automation and efficiency: Unlike humans, robots are not affected by the "human element" of emotions like greed, fear, and overconfidence while making strategic transactions based on market data analysis.

To mitigate risk, automated trading systems might try out several potential trading strategies using historical data and then use many of those techniques simultaneously.

If you are interested in natural language processing and how it works, you can read this essential guide: Beginners' Guide to NLP in 2022

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What Makes Blockchain And AI a Good Match?

Machine Learning is a type of AI that many people want to use to make money for their businesses. Pattern recognition is one of AI's best skills, and models can be taught to distinguish between, say, an apple and a pear.

So, if AI can find patterns in price data (the chart), it can predict which way the price will move next. Now that AI has found the pattern; you can buy and make money.

Bitcoin's future value is expected to be significantly influenced by the development of AI. In the last few years, the crypto business has grown a lot, bringing in many new customers from all over the world.

One reason the crypto market is becoming increasingly popular is that it is so easy for new people to get started. No longer do traders need to know a lot about the crypto trading market to make money from it.

On the market, there are a lot of cryptocurrency exchanges that let traders use algorithmic trading. This is an excellent deal for people who do not have time to keep an eye on the market or who don't know enough about or have enough experience with trading cryptocurrencies.

Cryptocurrency markets run by AI are open 24 hours a day, seven days a week. This means that traders are constantly watching the prices of cryptocurrencies.

This gives AI a lot of data to look at to predict future prices based on data from the past (gathering and analyzing historical market pricing). So, crypto and AI-assisted price forecasts are more accurate and faster since there is no chance of a mistake being made by a person while doing the math.

Bottom Line 

Understanding the crypto market and managing cryptocurrency investments takes a lot of time and skill. With the rise of more tech-based instruments, investors and traders are increasingly turning to AI and ML to help them comprehend how money works. As more institutional investors start to use crypto funding, AI and machine learning can help in the crypto markets.

Since blockchain technology makes cryptocurrencies work, Artificial Intelligence can work with blockchain to solve many problems. 

In this article, we gave you five benefits of using AI in the cryptocurrency market:

AI can be used to fund cryptocurrency in several ways, such as making more accurate predictions, figuring out how people feel about crypto interactions, automating crypto trading, and making it easier to sell assets.





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