Big Data And Crypto Markets

When it comes to predicting the future of financial markets, there are many players and strategies that have been used for years. Whether it be commodities, derivatives or equities, individuals and organisations have made considerable efforts in predicting the moves of these markets and make a lot of profit through it.

When it comes to cryptocurrencies, some of the same principles apply. With the market expanding and beginning to mature, big data is now being used to gain insights about the future of the cryptocurrency markets.

These are some of the main ways through which this can be achieved:

Cryptocurrency exchange data

With the rise of crypto, the number of exchanges has also grown exponentially. Not only have they grown in numbers, but they are more reliable, transparent and safe than ever before.

Exchanges can provide invaluable data, coming from transaction data, volumes, open orders or price history, which analysts can use as an important part of their data collection, along other sources, like the ones listed below.

Social Data

Aside from exchange data, perhaps the most important data source out there comes from social media platform analysis. Everything that is being expressed by masses of people on such platforms can be gathered and analysed through advanced software. The Stevens Institute of Technology actually completed a very comprehensive study on this matter, as expressed by professor Feng Mai:

“Many of us probably intuitively believe this, but this was the first robust statistical finding to verify that social media and bitcoin prices are actually linked. Vocal users of social media may sometimes have a certain agenda, in this case hyping or boosting the price of bitcoin because they themselves have invested in it. So if most of the social messages around bitcoin are generated by people who are biased, the sentiments on social media may not actually accurately reflect the currency’s actual value. This was a big finding, and it does seem to prove that people are trusting the silent majority much more, perhaps because they do not seem to have an agenda.”

Big Data Players

It comes as no surprise that in the last few years there have been quite a few companies and startups that started to focus on creating and developing platforms and software that can comb through large data sources and draw conclusions on future market movements.

PredictionVC is a startup doing just that, bringing both big data and artificial intelligence (AI) to the cryptocurrency markets, by looking at a wide array of cryptocurrency exchanges, social media channels, and crowdsourced data from the platform to gain insight on cryptocurrency price trends and analysis. Other examples include the likes of CryptoPredicted and CryptoForecast.

Because of the data-rich environment that cryptocurrencies provide with blockchain technology, big data can be leveraged not just for forecasting future price movements of cryptocurrencies, but for enhancing security as well.

Besides offering insight on consumer spending habits, improving a company’s marketing strategy, and a whole host of other uses, big data is making a heavy impact on the financial sector as well. Combined with AI, big data is an incredible resource that analysts are able to turn into a tool for making more informed forecasts for the future of not only cryptocurrencies but other markets as well.