Is Artificial Intelligence the “missing piece” in cryptocurrency investments

With cryptocurrency expected to develop across different sectors, analysts seem to be searching for that one piece of technology to enhance their understanding of it. It is believed that artificial intelligence (AI) can be the answer, to give insights based on market data analysis.

According to Fortune Business Insights, a market research firm, the global AI market is expected to grow from $387.45 billion in 2022 to $1,394.30 billion by 2029, at a 20.1% compound annual growth rate (CAGR). Experts believe that AI sector will help evolve cryptocurrency economy through creation of market price indicators to assist crypto investors. “I believe AI has features, including pattern recognition that can be used to boost the functionality of cryptocurrencies. Collaboration between AI and cryptocurrency is fairly new but holds the potential to combat fraud and increase speed of transactions. However, cost will be a key factor of consideration,” Prashant Kumar, founder and CEO, weTrade, a cryptocurrency-based platform, told FE Blockchain.

Market-oriented research has shown that AI and decentralised finance’s (DeFi) coexistence can increase financial transactions’ efficiency and reduce fraudulent activities in the decentralised landscape. As stated by Analytics Steps, an information services company, data scientists can utilise AI to supply trading information to crypto users and help analyse sentiments around the digital currency landscape. Furthermore, AI can help instil liquidity and reduce volatility in the Bitcoin market.

“Current AI applications in DeFi technologies are just scratching the surface, especially as the amount of data accessible grows and the sorts of DeFi services proliferate. I expect the marriage of AI, big data, and cloud computing to create opportunities both for the prediction of market behaviour and for making more sophisticated DeFi models,” Pratik Gauri, founder and CEO, 5ire, a blockchain-based platform, stated.

Reportedly, companies such as, Hudson River Trading, Jane Street, among others, utilise AI-based applications in crypto practices. Platforms such as TradeConnect utilise machine-learning algorithms to help customers get the appropriate broker and bank for digital currency-oriented transactions. Global sectors such as finance, e-commerce, investment ventures, among others, can benefit in this context. 

Moreover, future predictions indicate that AI-based developments will help monitor cryptocurrency market price fluctuations through trading bots. Insights from Analytics Vidhya, a data-based knowledge portal, highlighted that while AI has limitations and cryptocurrency market faces uncertainty, accuracy of a cryptobot can be bolstered through stability between efficiency and real value. “I think it is difficult to make accurate predictions about the future of AI in the cryptocurrency market, as it is a rapidly evolving field with many uncertainties. However, it is likely that AI will continue to play an important role in cryptocurrency investing and trading, as well as other areas of the financial industry,” Sathvik Vishwanath, founder and CEO, Unocoin, a cryptocurrency exchange, mentioned. 

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