Can AI Make Informed Decisions About Crypto Trading?
Eric Ma, CEO of TIDEX, comments on the explosive rise of large language models (LLMs) and how they could impact crypto trading in the future.
As AI technology develops, more humans are seeking advice for their investment choices in AI chatbots.
GPT-4, the latest version of ChatGPT, has taken the world by storm, causing both anxiety and excitement as a global base of users tests the limits of what it’s capable of.
According to GPT-4’s developer OpenAI, the latest version of the highly influential AI language model boasts “human-level performance on various professional and academic benchmarks,” including the ability to search for vulnerabilities and exploits in Ethereum smart contracts.
While AI boasts many merits that can reach a wide audience to make lives easier, ChatGPT can’t do it all.
At the time of writing, the AI has difficulty with giving out answers regarding the current price of well-known cryptos like Bitcoin, spitting out a message saying it “cannot provide real-time information on the price of Bitcoin as [its] training data only goes up until September 2021.”
Commenting on how LLMs like GPT-4 could be used in crypto trading in the future, Eric says: “There’s no doubt the advancements made in AI will help in many aspects of our lives, including crypto trading. With different plugins that specialise in different things, jobs like building websites to getting the most out of your investment will be tasked to AI.”
Crypto Trading Bots
Since automated trading bots are already popular with stock market investors, it’s perhaps no surprise that the same tools and techniques are now being adapted for crypto trading. There are now crypto trading bots powered by ChatGPT, crypto investment portfolios designed by ChatGPT, and even ChatGPT crypto market prediction contests. Across social media, it’s not uncommon to find influencers and YouTube creators touting all the ways that ChatGPT is helping to generate “insane” and “crazy” portfolio returns.
It’s now surprisingly easy to generate your own crypto trading bot using ChatGPT, even if you have no prior coding experience. ChatGPT is capable of generating computer code based on a simple natural language prompt.
For example, if you want a Bitcoin trading strategy focused on long-term returns, you can ask ChatGPT something like, “Give me the computer code for a dollar-cost averaging (DCA) Bitcoin strategy,” and voilà! You will have the computer code available in seconds. ChatGPT will even tell you which parameters you will need to adjust (e.g., the “buy frequency” and the “buy amount”), as well as from where it is pulling its Bitcoin price data.
While this is certainly a novel way of automating your trading, it’s not quite the mystical silver bullet for prediction where Bitcoin’s prices are going to land.
Upon being asked for Bitcoin price predictions, the AI cautions that “cryptocurrency prices are highly volatile and can change rapidly,” following with advice for the reader to “keep up to date with the latest market trends and news when investing in cryptocurrencies.” Even AI recognises the importance of DYOR!
Commenting on the possible convergence of AI and crypto, TIDEX CEO, Eric Ma, says: “It’s inevitable AI will be commissioned by users to predict markets, however, as good as AI may get in the future, it’s unlikely AI will be able to predict markets perfectly. AI will simply be another tool people use to help them beat the markets. And to solely depend on AI for everything would be flawed and add to the further degradation of society as a whole.”
