Artificial intelligence is already present in the crypto industry. Many digital exchanges already use AI-based algorithms to identify and stop market manipulation. This leads to constant chase between the exchange supervisory systems and those who want to exploit the crypto market holes.
Can AI be of help to a crypto trader? The answer is yes, which is why you should read this guide before trying to buy crypto with a credit card. Our article reveals the importance of using AI in crypto trading and different crypto applications that leverage artificial intelligence.
How AI Can Bring Value to Crypto Trading
The estimated size of the artificial intelligence market for 2024 is approximately $184 billion. The same reports indicate that the AI market could be worth up to $826 billion by 2030. It shows great potential, and we have already seen how AI can change many aspects of our lives for the better if used correctly. Here are the key benefits that make AI worth considering for crypto traders.
Real-time market monitoring
Unlike the stock market, crypto trading is open 24/7. The problem is that a human trader cannot monitor the markets around the clock. You need time to sleep, eat and engage in other activities. This is where artificial intelligence comes into play. AI-based algorithms have the power to analyze the market and identify potential trading opportunities even while you are away.
Another way AI can bring value is the speed of analyzing the market. It can take minutes or hours for a person to analyze the desired currencies and their past prices and current patterns. A well-designed AI algorithm can do that job in seconds. This ensures that you receive timely information that guarantees that you act in time to make the desired trade, increasing the chance of the maximum profit.
Historical data analysis
Artificial intelligence uses predictive analytics, which means it doesn’t just provide statistics about past market movements. AI uses historical market data to recognize patterns in trading volumes and identify market sentiments. Based on that, the algorithm predicts future price movements and identifies investment opportunities.
The trick is that algorithms can adapt along the way. AI learns from past experiences and changes strategies accordingly. This helps traders to optimize their trading decisions and increases the chance of being more successful in the future.
The removal of human emotions
Many traders use to trust their gut when deciding on an investment. And while it may work once or twice, it’s essentially luck. Your emotions can also compromise your ability to make a reasonable trading decision.
In some situations, you may be biased towards a particular currency. For example, Shiba Inu dog owners may have a soft spot for Dogecoin and decide to invest even if it is not the wisest option.
AI can analyze the crypto market without any bias. It does not use emotions, but only valuable insights. AI will dig deep and browse all the latest market sentiments and events, whether it is the Ethereum Dencun upgrade or another XMR delisting. Rational analysis is especially important in volatile markets like the crypto industry where every trade move can make a significant difference to your portfolio.
Explore AI Applications in Cryptocurrency Trading
Artificial intelligence has different applications in crypto trading. In the following sections, we discuss the crucial ways traders can use AI to their advantage.
Trading Bots
Automated trading bots are tools that automatically execute trades based on the predefined parameters. They deliver benefits such as 24/7 market presence, while reducing the trader’s actual time commitment and removing human emotion and error factors.
Investors use trading bots for short and long term trading. You can set parameters such as when to sell or buy specific currencies and adjust the strategy to your trading preferences. Automated bots will follow your orders and execute trades accordingly, regardless of whether you are online.
Omni is a platform that offers various crypto bots that work across different chains. Its omniTrade bot can make exchanges on DEXs via Telegram. You can set buy and sell limit orders when you’re away, and there are preset buy/sell switches to help with the process.
Social media integration
Copy trading is a concept where you use a social media platform to see what trading decisions experienced investors are making and then copy those moves to your portfolio. Artificial intelligence understands the importance of what the trading community thinks. Therefore, AI tools can analyze Reddit, Twitter and other networks in search of sentiments regarding different cryptocurrencies. Thanks to that information, you can determine whether the overall market sentiment is bearish or bullish.
Sentix is an AI social media sentiment analysis tool worth trying. It is an AI assistant that browses media activity and provides news coverage as well as news sentiment regarding crypto entities. You can use that information to see if the current public opinion about a currency is negative or positive.
Risk management
The crypto market is volatile, indicating that optimal risk management can be critical to a trader’s success. You can find many tools that use AI to identify the risk associated with different portfolios and trades. Thanks to those estimates, you can adjust your investment strategies.
Besides estimating the risk, these tools can recommend how to diversify your portfolio. Some applications even have the option to enable automatic stop loss orders that help limit a trader’s losses.
Another important benefit of these tools is the ability to identify any suspicious activity or potential fraud. Knowing more about market deviations and unusual events can help achieve effective risk management. It is worth noting that Coinbase and other major exchanges use ChatGPT and other AI tools to perform risk analysis of tokens and coins before they are made available for trading.
Closure
Artificial intelligence has already become a major presence in the crypto market. Experienced traders who understand how to harness the power of AI can have an advantage that increases the chance of maximizing profits.
AI can perform historical data analysis to identify patterns and adjust strategy on the fly to optimize trading decisions. You can use automated trading bots to identify investment opportunities and act on them immediately, even when you are not online. Whether you are a newbie or an expert trader, you will find AI tools to be of great help in volatile markets like the crypto industry.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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