AI-Based Algorithmic Trading Can Disrupt Bitcoin Market

AI helps bitcoin whales automate their trades, which has a huge impact on the market.

ai helps bitcoin whales automate their trades
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AI technology has had a huge impact on the direction of many industries. The traditional financial sector has been one of the most heavily affected. The market for AI in finance is exploding. Allied Research projects it will grow from under $4 billion in 2020 to over $64 billion in 2030.

These forecasts pertain to the expected proliferation of AI in the traditional financial sector. However, AI can be equally impactful for alternative financial professions, such as bitcoin traders.

There are a number of ways that AI is disrupting the market for bitcoins and other cryptocurrencies. One way is by making algorithmic trading more common. Even countries like Djibouti are using AI to trade bitcoins more effectively.

AI Technology Helps Bitcoin Traders Discover New Opportunities but Can Disrupt the Market

We previously mentioned that AI technology can help traders navigate the volatility of bitcoin. However, artificial intelligence can also lead to greater volatility at the same time. One of the reasons that AI can create more volatility is by making algorithmic trading more common.

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The cryptocurrency market is still in its infancy, which means that there are still many unknowns. This makes it more sensitive to changes in the market.

One of these unknowns is the role that whales play in the market. While we don’t know everything about how whales influence the market, we do know that they can have a significant impact on prices. Many of these whales use AI-based trading algorithms to automate their trades.

In recent months, we’ve seen an increase in the number of large transactions taking place on the Bitcoin blockchain. These transactions, known as “splashes”, are typically made by whales moving large amounts of BTC from one wallet to another. It isn’t clear how many of these whales rely extensively on AI technology to make their trades, but a large number of them certainly seem to do so. BitProfit is one the best platforms that is helping many of its users to earn profit with automated trading that uses sophisticated AI algorithms.

While it’s difficult to say exactly why whales are making these splashes and how much AI-driven algorithmic trading plays a role, some believe that they may be trying to manipulate prices. If a whale where to sell a large amount of BTC all at once, it could cause prices to drop sharply. Similarly, if a whale where to buy a large amount of BTC all at once, it could cause prices to surge.

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Of course, we can’t know for sure what the whales are up to. However, their impact on prices is undeniable. If you’re trading cryptocurrency, it’s important to be aware of the role that whales can play in the market.

Details about the on-chain data of Whales:

Whales have been playing an important role in the cryptocurrency market since its inception. They are the big players who can manipulate the market by buying or selling large amounts of digital assets.

As the prices of Bitcoin and other cryptocurrencies have surged in recent months, so has the activity of whales. AI-based algorithmic trading appears to be more common as well.

Data from blockchain analysis firm Glassnode shows that the number of whales holding 1,000 to 10,000 BTC has increased significantly since October 2020. This group now holds a total of approximately 650,000 BTC, worth over $32 billion at current prices.

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Similarly, the number of whales holding 10,000 to 100,000 BTC has also increased during this period. This group now holds a total of approximately 550,000 BTC, worth over $27 billion at current prices.

The increase in the number of whales holding large amounts of BTC is a bullish sign for the market. It indicates that more and more investors are accumulating Bitcoin with the expectation that prices will continue to rise in the future. More of them are likely to automate their trades with AI technology.

However, it is also important to note that whales can also have a significant impact on prices when they sell their digital assets. For example, if a whale decides to sell just 1% of its holdings, it could cause a significant drop in prices.

Therefore, it is important to keep an eye on the activity of whales and understand their potential impact on the market.

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Exchanges for Bitcoin:

Bitcoin exchanges are online services that allow their users to trade Bitcoin and other cryptocurrencies for traditional fiat currencies or other digital currencies. They can be market-makers that take the bid/ask spreads as transaction commissions for their services, or simply charge fees as a matching platform.

Most of these exchanges also provide highly liquid markets in which to trade Bitcoins. Since most of them offer in-depth analysis of the cryptocurrency market, advanced features like margin trading, derivatives and short selling, 24/7 customer support, deep liquidity, and high-security standards, they have become quite popular among cryptocurrency traders.

The largest Bitcoin exchange in the world at the moment is Coinbase, with over 13 million active users. Other popular exchanges include Kraken, Bitstamp, and Gemini. Many of them use AI algorithms to help investors automate their trades.

Bitcoin Wallets:

Before you can try to mimic the behavior of whales by using AI to automate your trades, you have to get a reliable bitcoin wallet. Here are is an overview of the main types of bitcoin wallets.

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Desktop:

Desktop wallets are downloaded and installed on a PC or laptop. They offer a high level of security; however, if your computer is hacked or gets a virus, there is a possibility that someone could steal your Bitcoins.

Mobile:

Mobile wallets are similar to desktop wallets, but they are apps that can be downloaded onto your smartphone. They offer the same level of security as desktop wallets; however, if your phone is lost or stolen, you will lose your Bitcoins.

Web:

Web wallets are hosted on a website and can be accessed from any device that has an internet connection. They are not as secure as the other types of wallets; however, they are convenient because they can be accessed from anywhere in the world.

Hardware: Hardware wallets are physical devices that look like USB sticks. They are offline devices, which means that they are not susceptible to viruses or hacking attacks. Hardware wallets are the most secure type of wallet; however, they are also the most expensive.

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AI Helps Bitcoin Whales and Other Investors Automate Their Trades

AI technology has definitely shaped the future of bitcoin trading. More investors are using AI to automate their trades. Many whales take advantage of this, which can manipulate the market. You need to understand their significance and try to time your trades accordingly.

Dariia Herasymova is a Recruitment Team Lead at Devox Software. She hires software development teams for startups, small businesses, and enterprises. She carries out a full cycle of recruitment; creates job descriptions based on talks with clients, searches and interviews candidates, and onboards the newcomers. Dariia knows how to build HR and recruitment processes from scratch. She strives to find a person with appropriate technical and soft skills who will share the company's values. When she has free time, she writes articles on various outsourcing models for our blog.