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AI in Cryptocurrency Markets: Trading and Market Analysis

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How AI Can be Used in Crypto Trading and Market Analysis

The crypto market is among the industries greatly impacted by AI. The introduction of artificial intelligence in crypto trading changed the way traders operate their digital assets. Like in other industries, AI brought automation, efficiency, and other opportunities that were once unimaginable. This post explores 3 cases of the use of artificial intelligence in the volatile market of crypto trading and market analysis. 

Real-time Analysis of Market Sentiment and Trends

Traders should rely on market analysis and trends before placing trends.  While manual market analysis takes a lot of time and is prone to errors, AI-backed algorithms can recognize patterns faster and more accurate. Accurate identification of recurring patterns, such as resistance and support levels, helps traders make better predictions about possible price movements.

Artificial intelligence constantly tracks headlines, social media posts and other events that may impact prices on cryptocurrency. Prompt analysis of news articles and other sources gives traders precious information on the expected market tendency helping them adjust their trading positions,

Define Arbitrage Opportunities

Apart from conventional trading, traders can also make profits from arbitrage trading. This is a process of purchasing digital assets at lower prices on one market and selling them at a higher price on the other market. 

Artificial intelligence helps to define arbitrage opportunities as soon as they arise. It analyses data in real time from various crypto exchanges to identify the trading volumes, price gaps, and spread in different markets. Unfortunately, making such analysis manually is nearly impossible. 

AI platforms can also exploit arbitrage gaps that arise due to latency, as they execute traders’ transactions faster than humans. AI places servers close to the exchange platform’s servers. This ensures a high-speed connection, which allows AIs to capitalize on the slight price differences between cryptocurrencies before they are standardized.

Fraud Detection and Alert

Artificial intelligence plays a definitive role in fraud detection. It helps exchange operators detect and flag suspicious accounts and actions before they harm the cryptocurrency platform. Here are some of the ways how outstanding AI solutions do it. 

First, AI can detect anomalies in reading activities which may be a sign of fraudulent transactions. Artificial intelligence analyzes transaction data, trading volumes, and other patterns to track transactions that deviate from the norm. 

Second, fraud detection systems powered by artificial intelligence can easily recognize suspicious patterns. AI relies on historic data and machine learning algorithms to identify similarities between current and previous fraud incidents allowing to define and prevent fraud in early stages.

Third, AI is an excellent tool for robust and accurate risk assessment. AI-powered fraud detection tools evaluate and assign risk scores to profiles, transactions, and accounts based on their likelihood of attempting or committing fraud. This allows them to warn traders and operators on potentially “high risk” profiles.  

If you’re seeking to bring the benefits of artificial intelligence into your crypto platform, look no further than S-Pro AI development company. Their dedicated experts will bring outstanding AI solutions and integrate them into your platform to unlock the potential and drive innovation, and sustainability of your app.

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Oleksandr Kryvotsiuk