Artificial Intelligence Helps to Earn on Cryptocurrencies

Johnny Walker
Chief Editor
9 March 2022 Updated on  Обновлено   1 February 2023

Cryptocurrency trading is as risky as it is profitable. The crypto market is known for its high volatility, that is, excessive fluctuations of prices for coins and tokens. On the one hand, volatility is dangerous. But on the other hand, thanks to volatility, brave traders and investors earn ten times more in the crypto market than in traditional markets. A technological approach using artificial intelligence (AI) can increase the chances of superprofits.

Role of AI in trading

What role artificial intelligence plays in trading

You can earn a lot on crypto trading if you do it with competence. However, there are also many difficulties and risks that can only be reduced by persistent study of wisdom. And then you still need a long practice of working with cryptocurrency exchanges. At the same time, there will always be a chance of losing money.

So, what to do for those who cannot stay on exchanges all day and analyse charts? Try to delegate the routine to artificial intelligence!

AI can be a useful tool for you to minimise risks. Having passed machine learning, it will help to limit possible losses and at the same time receive a higher income.

Intraday trading on a cryptocurrency exchange is incredibly stressful, especially for novice traders. Day traders are subject to the so-called emotional trading more than other market participants. Instead of humans, AI can analyse millions of data from different sources. Based on reliable information, it will draw the right conclusions that the trader can use in his/her work. Thus, AI will save you from making decisions under the influence of fear or greed.

Tasks of AI in trading

What tasks artificial intelligence performs in trading

There are 4 routine tasks where artificial intelligence would be useful. Let’s look at how it can increase the performance of crypto trading and reduce risks.

1) Crypto market analysis

AI is able to analyse hundreds of factors and, based on them, predict the movement of cryptocurrency prices. Using processed data allows you to escape emotional decisions and guesswork towards rational choice.

Of course, you shall not completely rely on the machine. You will have to study common market indicators in order to understand what this or that prediction means.

2) Sentiment monitoring

Sentiments in the crypto market can be monitored by special applications based on machine learning. These applications analyse content on the Web, recording the change in the frequency of words in users’ natural language. AI then draws conclusions about what the majority is inclined to: buy or sell any cryptocurrency.

The applications provide more extended analysis than just trend prediction. They take into account the general interest in the crypto market, the dynamics of positive and negative reviews on specific cryptocurrencies. For this, articles and comments on social networks, blogs, media, and forums are researched. AI determines sentiments based on changes in the general emotional background that is seen through thematic publications.

3) Crypto project analysis

Large price spikes in the crypto market never happen spontaneously. They are preceded by a change in the aggregate opinion of the crowd about the prospects for Bitcoin, Ethereum, or other popular coins and tokens. 90% of traders make decisions by following new trends in the crypto community.

Online calculators may help you assess the prospects of crypto projects. They allow you to calculate the effectiveness of investing in certain cryptocurrencies, taking into account many factors. Such factors can be: own blockchain platform, the usefulness of a project, low transaction fees, a strong team of blockchain developers, support from influencers and ambassadors.

4) Automatic trading

AI bots can trade in ways that humans cannot. They simultaneously conduct dozens of high-frequency trades. The bots are able to operate within the preset profit and loss limits.

Novice traders can run these bots without going deep into market analysis. For them, it is enough to correctly set the limits for stop loss and take profit.

Cryptocurrency trading is a high-risk, but at the same time highly profitable activity. With illiterate work, you can lose everything, but if you automate trading using machines, then you can get the maximum profit. Although even with the use of artificial intelligence in trading, you will need to know and feel the market. Algorithms only help analyse and suggest suitable solutions, but it is the trader who is responsible for the results.


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