How AI analysis can change finance and crypto trading
As artificial intelligence (AI) and its various subsets — such as machine learning (ML) — become more complex and developed, their presence within the financial realm has increased drastically.
According to a 2022 report by Nvidia, over 75% of companies operating in the financial sector apply machine or deep learning to optimize their internal operations.
Moreover, the study notes that 91% of financial firms are now driving critical business outcomes with investments in AI, with many of the surveyed companies stating that the burgeoning technology has helped them yield more accurate prediction models.
More than 30% of respondents claimed that using AI and ML has increased their annual revenue by more than 10%, while over 25% of the surveyees stated that AI has helped them reduce their annual working costs by more than 10%.
Despite its relative nascency, AI is poised to bring significant changes to the financial sector, with its potential being similar to that of computer-driven trading models introduced by Wall Street traders in the 1980s.
Jeroen Van Lange, founder and analyst for YouTube channel The Blockchain Today, told Cointelegraph:
“Moreover, ML-based tools are being used to analyze risk from borrowers to assess their creditworthiness using a broad range of data sources like their social media activity and online behavior,” he added.
Van Lange highlighted that since most cryptocurrency exchanges provide real-time data linked to their order books, ML algorithms can study these comprehensive data sets to predict short-term price movements.
Similarly, in the case of derivative exchange data, these models can sort out and process information like open interest, funding rates and taker buy/sell ratios much more rapidly
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