2023 has been a very thrilling year in the crypto space, with the bear market highlighting the need for investors to seek more sophisticated investment strategies. Now that AIs are slowly taking over the world, crypto investors have started welcoming the idea of using AI as an investment tool in the crypto space. If you are planning to jump on this trend soon, then you will need this article to guide you on how to use AI for crypto investing in 2024. Now that Artificial intelligence (Al) is starting to change the way investors analyze and decide about their investments in the crypto space, it would be in your best interest to use what it has to offer.
What makes Al useful in cryptocurrency investing?
If you are knowledgeable about the crypto market, you should already know how volatile it is. The volatility in the crypto market generally makes it very difficult for investors to identify and study profitable opportunities. Also, trying to predict the market using traditional market analysis may end up taking a lot of your time, especially if you are a new investor.
However, with AI systems, everything is made easier. Essentially, AI systems are specifically designed to gather data and analyze them using natural language processing (NLP), machine learning (ML) algorithms, and statistical models. Hence, it is capable of making accurate decisions based on the data collected.
Tools based on machine learning can help investors analyze crypto market data, confirm potential trends, and even identify trading patterns. Also, they can provide you with alerts to possible market changes and variables that may negatively threaten your position in the market. It is easy to take advantage of these insights to maximize your returns as a crypto investor.
Moreover, Al tools can monitor crypto markets in real-time, taking in content from different crypto exchanges, social media platforms, news items, as well as other sources. This allows crypto investors and traders to keep tracking the market and quickly respond to new opportunities.
Furthermore, Al systems can automate the whole process of buying and selling (trading) cryptocurrencies, executing different trades based on their data of the crypto market. This helps to save time and effort and also reduces the risk of human mistakes.
Additionally, crypto investors can make use of Al tools to analyze the different risks associated with potential crypto investments and get solid recommendations for how to organize and balance their portfolios.
Types of Al trading tools
Here are some of the most notable types of AI trading tools that can come in handy for both traders and investors in the crypto space:
1. Trading bots
Automated trading bots are generally used for short-term trading. These bots allow traders to set them to perform a specific strategy, observing to find specific patterns available in the data. Trading bots can be hosted on an exchange platform or simply integrated with an exchange with the use of an API. A good example of an automated crypto trading bot is Omni, which operates on the Solana blockchain.
2. Price forecasting
It can be very difficult for humans to analyze and predict highly volatile cryptocurrency prices. However, all of these are easy with AI due to its ability to synthesize huge volumes of data and recognize complex patterns. So there are price forecasting tools that can help you determine the prices in the market.
3. Social media integration
Some trading platforms also offer users social trading features. These features allow users to copy the trades of other reputable crypto traders that they respect and follow. Also, Al makes this better by constantly studying sentiment from different social media platforms such as Reddit and X (formerly known as Twitter) to predict trends.
What is the best platform to buy & sell cryptocurrencies in 2024?
Bitmama allows easy and swift buying and selling of crypto from over 5 networks at low cost. You can also trade a wide range of cryptocurrencies including Bitcoin, Ethereum, stablecoins like USDT, USDC, PYUSD and so much more. Download the Bitmama app now and open a free account to get started.
Check this out: How to buy PYUSD in Africa
How Al-powered investment automation works
Automated trading uses computer programs to predict and execute trades on behalf of the trader based on preset criteria. The aim of this is to make trading easier, and more efficient and to minimize human involvement as much as possible. This will eventually remove the impact of emotions on crypto trading decisions, which may cause investors to become overconfident or panic and make irrational trades. Here’s how Al-Powered investment automation works:
- Machine learning collects data and trains an Al algorithm based on historical datasets to allow it to make informed predictions about what the future data will be like;
- Deep learning makes use of multi-layered neural networks to understand and make predictions based on data;
- Reinforcement learning (RL) will then train Al algorithms to make informed decisions through a solid system of rewards for accurate decisions and penalties for inaccurate decisions.
Once an AI has been trained well to collect and analyze the data available, it can be backtested. This ensures that it makes accurate decisions about previous data and is dependable enough to apply in forecasting future prices. The Al algorithm will then be able to execute trades based on its informed price predictions.
Examples of Al-based cryptocurrency trading tools
There is an increasing number of Al-based tools that you can use for real-time market monitoring and for identifying different opportunities. Here are some popular examples of Al-based cryptocurrency trading tools:
1. SingularityNET
SingularityNET, a decentralized network, is a platform that permits users to create and monetize Al-based services on its wide range of marketplaces, including bots for crypto market analysis
2. Cryptoindex
Cryptoindex is a prominent trading platform that offers users Al-based analytical trading tools, such as an index that can track the top 100 largest cryptocurrencies by market capitalization.
3. TensorCharts
The TensorCharts platform is a cryptocurrency-centered day trading software app that makes use of Al to deliver its users live market data visualization.
4. Hypelndex
Hypelndex is another Al platform that crawls the internet to analyze different sentiments on cryptocurrencies, which helps traders to make moves before market movements.
5. Kryll.io
Kryll.io is a popular algorithmic crypto trading platform that permits its users to develop or rent Bitcoin and altcoin Al bots that will help them automate their trading.
Read this for security tips while trading: How to protect your account from phishing attacks
3 tips for using Al tools in cryptocurrency investment in 2024
Here are a few tips to guide you on how to use AI for crypto investing in 2024. Ensure that you take these precautions when using AI to buy or sell assets:
1. Do your research
Ensure that you don’t solely depend on AI, especially during your research phase. You should only use Artificial Intelligence as a part of a more comprehensive investment strategy, where you must have already done due diligence on the trading. We do not recommend that you soley rely on whatever Al outputs.
2. Always verify information
Although Al can analyze and provide a wealth of information, you still need to verify that the information it provides is accurate before concluding crypto trades or investments. Al’s are not 100% perfect and are capable of making mistakes!
3. Be aware of security risks
Since AIs are digitalized, they can be extremely vulnerable to security risks and different malicious attacks. Ensure that you always use secure AI tools from reputable sources. Don’t just settle for any kind of AI tool.
Ultimately, while you may now understand how to use AI for crypto investing in 2024, you should note that AIs can also get it wrong. The best and most complex Al models can still get predictions sometimes, so investing in crypto is at your own risk. Nonetheless, by following the best tips for trading and investing provided above, you can use Al tools to improve your investment strategies and avoid unnecessary losses. Remember, the crypto market is extremely volatile, so no outcome is 100% guaranteed.
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