The burgeoning cryptocurrency market is still one that, despite being worth billions, is small enough to be heavily affected by public sentiment. To this end, cryptocurrency-friendly trading platform eToro, and analytics and finance management startup The Tie have launched a sentiment-based analytical tool to track people’s perception of cryptocurrencies.
The benefit to traders with this tool is undoubtedly huge; Crypto Twitter is a massive facet of the ecosystem and has been linked to big rises and falls in the prices of certain cryptocurrencies over time due to speculative investing in the space.
This new tool will analyze digital currency-related conversations, processing 850 million tweets every day by means of machine learning and natural language processing technology, in order to point crypto investors towards the “smart money”, according to the release.
This investment strategy is locked in on opening trades on positive sentiment signals only. TheTIE-LongOnly CopyPortfolio’s strategy opens trades based on positive sentiment signals on Twitter.
Accessing the Twitter Firehose tweets are expertly analyzed for their crypto sentiment. Rebalancing takes place monthly and is done algorithmically using advanced machine learning techniques.
It already seems like it is a solid investment strategy as since its launch, in October 2017, the algorithm has generated a 281 percent return compared to a 41 percent return generated by Bitcoin alone.
Joshua Frank, co-founder, and CEO of The Tie, has explained the simplicity of tapping into this sentiment strategy with this new tool:
“All you need to do is click one button and you can copy these sophisticated trading strategies trusted by some of the world’s leading hedge funds and institutional investors.”
The performance, and the fact that such a tool has been designed, points towards the importance of Crypto Twitter and how public sentiment is still such a powerful tool to level the playing field.
“In traditional markets, retail investors have historically lagged behind the ‘smart money’ when it comes to the data and tools available to them,” added Guy Hirsch, US Managing Director of eToro. “This puts individual investors at a major disadvantage. In the spirit of crypto and decentralized technology, we believe that offering institutional-grade tools to every investor will level the playing field and democratize investing.”