The impact of AI technology on crypto trading
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As we all know, AI technology is becoming more prominent in many fields, such as navigation, entertainment and software development. With each passing day, more and more people gain access to this technology and use it in more areas, and of course the economy could not be the exception.
You can now find an automated AI-based crypto trading platform anywhere in the market, but what does this mean for cryptocurrency users? And how will it affect the future? The following article will discuss AI technology and its effect on crypto trading.
What is AI technology?
Artificial intelligence or AI technology is often defined as the simulation of human intelligence or the cognitive skills associated with it, such as “learning” or “problem solving”. However, this concept has been rejected by various AI researchers, who now describe AI as any system that can perceive its surroundings and take action to achieve its goals effectively.
How has AI affected the crypto market?
AI technology has been used in many areas of the economy for years to detect market manipulation or fraud. However, this usage changed significantly during the introduction of cryptocurrencies to the market.
Economic predictions
AI technology allows predictions using algorithms with past data. This allowed AI to make more accurate market predictions and analyses, which in many cases would change the market flow by causing many users to sell or buy some types of cryptocurrencies more often, especially private companies with greater access to this technology.
Algorithmic trading
AI technology will also be used to create more advanced algorithms and what we know as algorithmic trading. Algorithmic trading allows any user to enter the parameters of the trade they want and let the AI do the heavy lifting, meaning the AI will search for offers with the parameters you have entered or stay on standby and wait for an offer to appear.
Benefits and Risks of AI Technology for Crypto Trading
AI technology in crypto trading can provide easier access for people who want to enter this world, as it will no longer be necessary to keep an eye on various offers to buy or sell assets. Many platforms can even offer safe demo modes where you can test and run scenarios, ensuring that all your trades are executed without inconvenience.
Nevertheless, we must mention that using AI technology is not without risks. As we mentioned earlier, companies are primarily implementing AI technology to predict the near future in the flow of the market. However, if the data is manipulated or there are errors in the algorithm, it can lead to erroneous movements or transactions. Another worst-case scenario is the misuse of AI results, which can lead to market manipulation where said results are used or promoted to cause a desired movement in the market.
Traders can use AI technology to ease the crypto trading process for both new and old traders. But as with any technology, it must be used carefully and not become too dependent. Be sure to study and inform yourself before using a crypto trading platform and remember that while AI can automate trades, it cannot guarantee success. If traders fail to set the right parameters, AI can automate losses and amplify them.
