Disclaimer: The information presented does not constitute financial, investment, trading or other advice and solely reflects the opinion of the author.
Trading Bitcoin (BTC) can be both lucrative and challenging. One way to do this is by developing effective trading strategies that can help traders navigate complex and ever-changing market conditions. This is especially true for the world’s largest cryptocurrency, an asset no stranger to it over the years.
For a long time, the price of the cryptocurrency fluctuated between $200 and $1,000 on the price charts. However, in late 2017, the value of BTC exploded, hitting an all-time high of nearly $20,000 in December.
Read Bitcoins [BTC] Price prediction 2023-24
As market participation increased, the price rally was also short-lived. By early 2018, the price of BTC had fallen back down to around $3,000. The cryptocurrency market as a whole went through a period of decline, with many investors losing significant amounts of money.
Nonetheless, Bitcoin rallied remarkably, surpassing its previous all-time high in late 2020 and hitting an all-time high of over $68,000 in November 2021. However, the trading year 2022 ushered in a new era of bearishness, which was exacerbated by the collapse of Terra/LUNA and FTX. In fact, Bitcoin was trading at a two-year low of $15,000 in November 2022.
While the crypto market may be unpredictable and volatile, traders and investors can still make informed decisions by staying abreast of market news, following expert analysis, and utilizing smart trading strategies such as those offered by ChatGPT.
ChatGPT: A Messiah Who Can Help You Trade Better?
In November 2022, the AI model ChatGPT was presented to the public. In fact, it quickly gained a lot of attention. Given its wide range of services and versatility, the question arises as to whether ChatGPT can leverage its expertise in other ways, such as helping BTC traders formulate and apply improved trading strategies.
When asked if this was possible, ChatGPT replied:
Source: ChatGPT
Due to its nature as an AI tool, there are limitations to what ChatGPT can do in terms of price predictions and future price movements. However, there are ways to use the tool’s capabilities to formulate better trading strategies as a BTC trader.
One way to use the AI tool to develop better trading strategies is to use it for fundamental analysis. ChatGPT is able to extract insights from financial news articles, social media posts and other unstructured data sources. This information can then be used in conjunction with other data sets to develop informed 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 sentiment analysis on information from news articles, on-chain data providers, social media discussions, and other sources. This can be used to determine if the BTC market is stuck under positive sentiment or plagued by negative sentiment.
Additionally, ChatGPT can be used by BTC traders for technical analysis. Traders can ask ChatGPT to program any technical indicator or trading bot for any trading platform.
For example, I asked ChatGPT to give me an example trading bot that I can use to track BTC price volatility in Pine Script – TradingView’s programming language useful for backtesting trading strategies. The AI replied:
Source: ChatGPT
In order to use ChatGPT for technical analysis, traders need to be familiar with the language in order to know when to make the necessary changes for the code to work properly. The wording of the input is critical to how ChatGPT understands the issue in order to provide the expected solution.
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For a well-rounded account, I spoke to Brian Quinlivan, Marketing Director at Santiment, who also happens to have been involved in bitcoin trading for a number of years.
Brian Quinlivan holds an MBA in Finance from Chapman University and has over 10 years of marketing, finance and data analysis experience. He enjoys creating financial models to improve modern investment strategies and examine the intricacies of market fluctuations.
Q: In what ways do you think ChatGPT can revolutionize cryptocurrency trading?
Yes, I think there will be a lot of use for it, especially for trading strategies. One thing to worry about is the consensus that can result from an AI technology dictating some sort of overarching strategy, whether it’s hodling or a baseline strategy.
ChatGPT could easily be used to manipulate, and even unintentionally manipulate, its audience, and we’re already seeing slight repercussions from this.
I think it can be helpful and dangerous at the same time, leading to many people being enlightened much more quickly, but also being steered in directions that may affect the development of cryptocurrencies and spawn many self-fulfilling prophecies.
Q: How do you think a BTC trader/investor can use the AI tool to make better investment decisions?
I think, in short, I think scripting would be used a lot more in AI because all the data could be processed at the same time and a very simple answer could be given as to whether to buy or sell. I believe that this can have a huge impact on the markets in the future.
How Soon Can BTC Hit $30,000 Again?
As mentioned above, ChatGPT is not able to make predictions about the future. However, I did ask them to give me their take on how quickly BTC would reach the psychological $30,000 price level amid what appeared to be bearish macroeconomic factors.
So that it answers my question, I decided to jailbreak it with the Do everything now (DAN) Method. After that it said:
Source: ChatGPT
I continued to poll AI technology on bitcoin prices between 2023 and 2024.
Source: ChatGPT
At press time, BTC was trading at $26,486. Down 2.5% in a week, BTC has fluctuated between the $27,400 and $26,100 price levels over the past seven days. Investors are hoping that the token will recover and somehow reach the $30,000 price mark.
As investors anticipate reclaiming the $30,000 mark, many have taken profits on their investments. According to data from HolyAt press time, the coin’s MVRV ratio was 45.85%, indicating an upward trend.
Source: Santiment
A positive MVRV ratio above two for any crypto asset means that on average, holders can earn a profit of twice their initial investment by selling their coins at the price at the time of publication.
On the daily chart, sellers could see that they were in control of the BTC market and have been for the past few days thanks to the recent downward movement in prices.
At press time, the positive directional indicator (green) was at 26.99 above the negative directional indicator (red) at 16.14.
Additionally, the average directional index (yellow) at 15.93 showed a bearish trend for the leading cryptocurrency.
BTC’s Relative Strength Index (RSI) is at 66 above its neutral reading of 50 and its Money Flow Index (MFI) was at 79.
ChatGPT might be right
According to ChatGPT, the price of BTC is expected to continue to rise and reach new all-time highs between 2023 and 2024 due to increasing adoption (by corporates and institutions) and increasing appeal of BTC as a hedge against inflation. This prediction is spot on as favorable macroeconomic conditions can help boost the value of the leading coin.
However, it is trivial to note that increased regulation and government crackdown could spread FUD and lead to a price collapse.
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