From Google Home to Alexa, Artificial Intelligence to play large in trading of cryptocurrencies

From Google Home to Alexa, Artificial Intelligence to play large in trading of cryptocurrencies

From Google Home to Alexa, the role of artificial intelligence (AI) seems to have grown over the years. It is now believed that AI will play a greater role when it comes crypto being traded. “As a greater number of financial institutions start offering crypto-assets as wealth management offering, the roles of AI-supported trading will become more popular. There are over 4,000 cryptocurrencies and even the oldest coins show large fluctuations in their prices. Likewise, Bitcoin 30-day volatility index is twice the value from 2016 (as per data published on buybitcoinworldwide),” Saurav Raaj, founder, director, Wize, a non-fungible token (NFT) infrastructure for businesses company, told FE Digital Currency.

As per industry observers, AI is used in intelligent trading systems for stock market prediction and currency price prediction. As per a report by IEEE Access, Generalised Autoregressive Conditional Heteroskedasticity (GARCH), is a time-series statistical model used for understanding volatility.  “AI is in the area of market sentiment analysis. Unlike traditional stocks, discussions among trading communities and social media reports, can drive trading decisions. AI with natural language processing (NLP) can analyse market and community sentiments and provide valuable insights to the traders,” Raaj added.

Courtesy: IEEE Access, ResearchGate.

It is believed that trading decision is usually based on behavioural biases that cause them to act on an emotion which could lead to mistakes while processing information. “AI-guided crypto trading is unlikely to get rid of emotional factors, it is likely to amplify that via machine learning. A deliberate fix in AI programmes to avoid trading at large corrections, and surges may help. Still, it is also likely to slow the usual stop-loss or take-profit exercise,” Liquing Yu, Economic Intelligence Unit’s (EIU) analyst on India, Indonesia, and Singapore, said.

Furthermore, industry experts noted that if properly implemented and trained, AI can help eliminate human bias. According to Vikram Pandya, director, Fintech, SP Jain, it definitely helps make scientific decisions backed by data and not by impulse.

According to Business Insider Report in June 2019, there are three areas where AI is used in banking, namely, conversational banking, anti-fraud detection, risk assessment, and credit underwriting. AI-based systems can help to process trading data which can assist traders to make better investment decisions. “AI with machine learning (ML) can provide safeguards against such attacks and reduce damages in real-time. In extreme cases, it can be utilised to trigger circuit breakers and even stop trading,” added Raaj.

Also Read: From centralisation to decentralisation; how blockchain-oriented fintech can benefit the financial sector

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