NASDAQ Reportedly Planning Crypto Price Prediction Tool
The market operator gave signs of working on AI-assisted analysis of social media to guesstimate the sentiment and direction of the crypto market.
The NASDAQ market operator has been working on a project to track the sentiment and potential direction of the crypto market, a person close to the company stated. Bill Dague, head of Alternative Data at NASDAQ, explained to crypto news site Coindesk that NASDAQ was working on AI solutions and data analysis, but no hard and fast decisions were made to add the tool to the portfolio of market prediction software.
The crypto market is a data-rich environment, with a mix of information from wallets, the blockchain itself, but also social media such as Twitter and Reddit. Sentiment and social media noise often coincide with significant price movements.
The NASDAQ market operator is no stranger to the crypto market. The European branch, NASDAQ Nordic, hosts two investment vehicles by XBT Provider, tracking the price movements of Bitcoin and Ethereum.
The news of NASDAQ getting serious about an AI tool and monitoring the crypto space are related to the expectation of institutional funds flowing in. For now, the unpredictability and volatility of Bitcoin and altcoins have put a hamper on institutional investments.
Additionally, the US Securities and Exchange Commission (SEC) recently put a stop on the trading of two funds tracking the price of BTC. The current climate on institutional investments is a wait-and-see, as big firms prepare slowly to unroll crypto-related products.
However, crypto trading remains highly unpredictable, with many suspecting the possibility for a concerted effort at manipulating prices, including the usage of bots and trading algorithms. There are numerous attempts to use signals and social media noise to predict the direction of crypto assets, but the market is small enough and there is still place for unexpected, unpredictable movements.
The crypto space itself tries to predict the future direction of the market by observing the behavior of big financial companies, as one Twitter user suggested:
https://twitter.com/Altcointeam/status/1037402656472543234
At the moment, the direct inflows of fiat into the crypto space have dwindled, as both retail and institutional investors are waiting out the unfavorable bear market conditions. Crypto trading has turned into an internal game of switching between crypto assets, or between coins and fixed-price crypto tokens. It is also unknown if institutional finance would attempt to own crypto coins directly or find other ways to bet on the price movements.