Bitcoin (BTC) trading is both profitable and challenging. Developing effective trading strategies to help traders navigate complex and constantly changing market conditions is one way to achieve this goal
Bitcoin (BTC) trading is both profitable and challenging. Developing effective trading strategies to help traders navigate complex and constantly changing market conditions is one way to achieve this goal. This is especially true for the world's largest Cryptocurrency, which has been familiar with volatility for many years.
For a long time, the price of Cryptocurrency hovered between $200 and $1000 on the price chart. However, at the end of 2017, the value of BTC experienced explosive growth, reaching a historic high of nearly $20000 in December.
As market participation increases, price increases are also brief. By the beginning of 2018, the price of BTC had fallen back to around $3000. The whole Cryptocurrency market recorded a period of decline, and many investors lost a lot of money.
Nevertheless, Bitcoin has achieved a significant recovery, surpassing its historical high at the end of 2020 and reaching a historical high of over $68000 in November 2021. However, the 2022 trading year ushered in a new bearish era due to the collapse of Terra/LUNA and FTX. In fact, in November 2022, the trading price of Bitcoin was a two-year low of $15000.
Although the Cryptocurrency market may be unpredictable and volatile, traders and investors can still make wise decisions by understanding the latest market news, following expert analysis and using intelligent trading strategies (such as those provided by ChatGPT).
ChatGPT: A savior who can help you trade better?
In November 2022, the artificial intelligence model ChatGPT was released to the public. In fact, it also quickly gained great attention. With its extensive functions and versatility, the question arises whether ChatGPT can provide its expertise in other ways, such as assisting BTC traders to develop and apply improved trading strategies.
Due to its nature as an artificial intelligence tool, ChatGPT has limited role in price prediction and future price trends. However, as BTC traders, there are multiple ways to utilize the functionality of this tool to develop better trading strategies.
One way to develop better trading strategies using artificial intelligence tools is to deploy them into basic analysis. ChatGPT can extract insights from financial news articles, social media posts, and other unstructured data sources. This information can then be combined with other datasets to develop wise trading strategies.
Another way to use ChatGPT as a Bitcoin trader is to use it for sentiment analysis. ChatGPT can be fine-tuned to perform emotional analysis on information from news articles, on chain data providers, social media discussions, and other sources. This can be used to determine whether the BTC market is hovering in positive emotions or being troubled by negative emotions.
In addition, BTC traders can use ChatGPT for technical analysis. Traders can request ChatGPT to write any technical indicators or trading robots for any trading platform.
For example, I requested ChatGPT to provide me with an example of a trading robot that I can use to track the price fluctuations of BTC in the pine script - the programming language of Trading View can be used to backtest trading strategies. Artificial intelligence responded by saying,
To use ChatGPT for technical analysis, traders need to be familiar with the language to understand when necessary code modifications can be made to function properly. The wording entered is crucial for ChatGPT to understand the problem and provide the expected solution.
For a comprehensive article, I interviewed Brian Quinlivan, the marketing director of Santiment, who happened to have been involved in Bitcoin trading for several years.
Brian Quinlivan holds an MBA degree in finance from Chapman University and has more than 10 years of experience in marketing, finance and data analysis. He enjoys creating financial models to improve modern investment strategies and study the complexity of market changes.
Q: What aspects do you think ChatGPT can completely change Cryptocurrency transactions?
Yes, I think it will have many uses, of course, for trading strategies. One thing to worry about is that AI technology may provide an overall strategy, whether it is a hosting strategy or a basic strategy.
ChatGPT is easily used to manipulate or even unintentionally manipulate its audience, and we have seen its slight impact.
I think it is both beneficial and dangerous. It can make many people receive education more quickly, but it will also be pulled to the direction that affects the development mode of Cryptocurrency, and create many self fulfilling prophecies.
Q: How do you think BTC traders/investors can use artificial intelligence tools to make better investment decisions?
I believe, in short, that scripts will be more used in artificial intelligence because all data can be digested simultaneously and a very simple answer is given whether to buy or sell. I believe that this will greatly affect the market's forward development.
How soon can BTC reach $30000 again?
As mentioned above, ChatGPT cannot predict the future. However, given the seemingly bearish macro factors, I request its opinion on how long BTC can reach the psychological price of $30000.
In order for it to answer my question, I decided to use the DoAnythingNow (DAN) method to escape from prison. It later said this:
I further inquired about AI technology regarding Bitcoin prices from 2023 to 2024.
As of the time of publication, the transaction price of BTC exceeded $26500. Although its value fell by 2.7% within a week, its trading price earlier this week was approximately $27200. As the U.S. Securities and Exchange Commission sued Binance and Coinbase, it fell by about $25400 earlier this week, but soon recovered. Investors hope that the token can recover and reach the price mark of $30000 in some way.
Many people have already profited from their investments as investors are expected to recoup at a level of $30000. According to Santiment's data, as of the time of publication, the MVRV ratio of this token is 45.85%, which is on the upward trend.
A positive MVRV ratio higher than 2 for any crypto asset means that, on average, if the holder sells their token at the price they received at the time of publication, they can earn twice the initial investment profit.
On the daily chart, it was found that the seller controls the BTC market and has been doing so for the past few days, thanks to the recent witnessed price decline. As of the time of publication, the positive indicator at 17 o'clock is located below the negative indicator at 23 o'clock.
In addition, the average direction index of 15 shows the bearish trend of major Cryptocurrency. The Relative strength index (RSI) of 37 and the fund flow index of 33 are far below the neutral point of 50. It seems that bears have temporarily dominated bulls, but making long-term predictions is a challenging task.
ChatGPT may be right
According to ChatGPT data, due to the increase in adoption rates by companies and institutions and the increasing attractiveness of BTC as a hedge against inflation, it is expected that the price of BTC will continue to rise and break historical highs between 2023 and 2024. This prediction is correct because favorable macro conditions can help drive up the value of leading tokens.
However, it is worth noting that strengthening regulation and government crackdowns may spread FUD, leading to its price decline.
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