Artificial intelligence (AI) has improved greatly in the last couple of years, and the market quickly found ways to implement it in various industries. Crypto trading was one of the first to do so, as the two are a great match both in terms of innovation and productivity.
In this article, we’ll dive deep into how the crypto trading platforms already use AI and what potential uses may come up in the years to come as the tech improves and expands.
AI-Driven Trading
The most important innovation that AI has brought to crypto trading platforms is the assistance it provides to the trading itself. The AI is used to analyze large datasets, market trends, and historical data. This information provides traders with options for buying and selling cryptos.
The same process was always handled by brokers when it came to trading stocks and to the traders themselves once cryptos were still a novelty. AI has proven to be useful in this regard, and in many regards, it’s less risky than the human alternatives.
Personalizing the Trading Experience
There’s no one-size-fits-all solution for navigating the crypt world. There are market trends and cryptos that are safer than others, but in the end, every investor has their own strategy, and the trade patterns need to adapt to it.
AI can be used to analyze both the markets and investors’ trades and moves. That way, the two can inform each other. A personalized approach to trading helps the traders be as aggressive or risk-averse as they prefer while still using up-to-date information and all the data on potential trades available.
Managing Risks
Trading in crypto includes risks, as is the case with any other trade. This is especially true when it comes to using crypto trading platforms with leverage. These platforms offer an additional service by borrowing funds from the traders. It allows small-time investors to get the backing they need before diving into the crypto world.
With access to additional funds, managing risks becomes even more challenging. AI is used to make the portfolio balanced, and, therefore, the risks are lowered. This means trading in a variety of different cryptos based on different technologies that are used in a variety of industries.
Analyzing Market Sentiment
Market sentiment determines the value of cryptocurrencies, as they are not tied to the work of any centralized bank. This is what makes cryptos volatile, and trading on crypto platforms is worth the investor’s effort. Artificial intelligence is already widely used to track, analyze, and predict market sentiment, as it affects crypto value.
This includes the price of major crypto, the regulations imposed on the industry, the changes in technology, the rate of adoption, and the financial context in which the crypto exists alongside other assets. All of these parts matter, and the AI can learn to condense them into actionable advice.
Fraud Detection
AI is instrumental in both detecting and preventing fraud on trading platforms. Frauds are best detected by following and analyzing the user’s behavior. AI is effective at that because it works best when it comes to noticing patterns and, therefore, a behavior that deviates from it.
AI is often used to notice and flag behaviors that are suspicious, but the decision on how to react to that behavior is still left to humans working for crypto trading platforms. It’s too important to be left to AI alone, and it allows the user to explain themselves and argue their case.
Trading Bots
Trading bots are AI tools built into crypto trading platforms that execute trades based on investor instructions. The investments can be made at all times and when the conditions that the investor has created are met. At the same time, measures could be put in place for the investor to confirm large purchases.
As long as the metrics set by the investors are clear and guidelines are put in place, AI bots can make trading more efficient and allow investors to focus on strategy rather than on the execution of trades.
Customer Support
Using the services of a crypto trading platform can be somewhat complicated, especially for a novice. Funds are on the line, and sometimes trading itself can be overwhelming. Mistakes can be made both by the users and by the platform itself. That’s why having a good customer support system is so important. However, it’s also true that most users contact customer support to ask a few of the same questions and address common concerns.
AI is being widely used to fulfill the role of customer support, at least to an extent. Once the issues the users face become too overwhelming for the AI, the users are moved to a human who can help them.
To Sum Up
AI has improved greatly, and it’s continuing to improve by use and with a wider base of users. Cryptocurrency trading platforms are among the first that have started using AI, both by the investors and by the platforms themselves.
AI takes the role of market analysis, customer support, risk management, and automation in general. Chances are that in the years to come, AI will be used even more and that it will improve in the areas that it’s used already.
