The Coming AI Boom in Crypto Investing

mrxlvii (34)in #crypto • 7 years ago (edited)

I hate to be the bearer of bad news, but the crypto landscape is changing.

How's Dumping On The Bankers Going? lol

All of the last year, people were chomping at the bit for the institutional investors to arrive. "Once wall street investors arrive, all of their money is going to funnel into crypto, and then we're going to dump on them." The idea being that wall street were a bunch of dinosaurs, and they "wouldn't understand." This idea never made any sense. Sure, you do have your 65 year old dinosaurs that barely understand how to make a facebook profile, but there's also that hot shot from your high school that got a job at Goldman right out of his Ivy League school. He is pretty tech savvy as well, and certainly knows about any way there is to make money.

The long and short of it (haha) is that Wall Street has been here since the beginning, and only now are the "institutions" arriving. Now, this will, on the whole bring about that new ATH, but it's going to do a lot more than that. Soon, like next 6mo-5 years, the difficulty level of the crypto market will increase. It is going to be a lot harder to make those gains from bitcoin. Institutional money is plentiful, and they want your BTC. Additionally, while crypto markets are very liquid, many exchanges are not. Major buying and selling from whales will drastically affect market price. Mt. Gox unloading it's Bitcoin is a prime example of this.

This brings about a host of problems for whales. There are quite a handful of people that are "crypto rich," but fiat poor. Several of them are simply early adopters who have too many coins to unload, the rest of which are ICO founders who have a lockup period or a lack of volume so they cannot unload their shares. Not every ICO founder can pull a Charlie Lee, shill on CNBC and get out as the price plummets. Interestingly enough, he is still beloved by the Litecoin community. Baffling.

As a consequence, many of these crypto rich have been unloading their coin, over-the-counter. Institutional buyers--that want Bitcoin/ETH--will approach these crypto rich, offer them 33 cents to 50 cents on the dollar. They take the deal because its a win-win. They get the fiat, and because this transaction took place away from the market, the value of each coin hasn't gone down. During Q1 and Q2, this was going on. I've heard rumblings of it on Twitter. The crypto influencer XHV debacle briefly mentioned OTC trading of coins. It's happening.

As these institutions get more BTC, they're going to want to sell it, and they're going to want to make substantial profits while doing so. This requires a) shaking out weak hands and b) running up the price. Sachs and JPM are not going to do it on Kraken or Coinbase, they're going to buy their own exchange ( like the Circle deal with Poloniex) and they're going to Market Make.

These institutional traders have teams of statisticians, programmers, and analysts. They will destroy the little guy.

This brings me back to you. Crypto has been fun and profitable to this point. All you had to do was hodl, and everything was gravy. Every shitcoin made 20x returns or more, and everyone felt like a genius while getting really rich. That's now over. You will still see the money making volatility that you love, but hodl is going to lose you quite a bit of money in all likelihood. All while those "bankers you were going to dump on" steal your precious coin.

What do you do?

It's luckily still early enough. If you're going to survive, you're going to need an edge, and quickly.

Start looking for trading bots / AI

If you can get a bot, that will limit your losses in the down markets, you will DRAMATICALLY increase your profits. If you can get an AI that can predict and effectively respond to changing markets, I strongly suggest you do. It will not take long, but soon, this fun market filled with retail investors will begin to mimic the stock market. The volatility will still be there due to the lack of regulation, and the liquidity will only continue to increase, but you will be playing against institutional traders with a decade of experience. You will be playing against hedge funds and crypto funds--all of whom will have trading algorithms. You need to stack the odds in your favor now.

AI will begin to dominate the crypto world. Especially the more liquid blue chip coins. The retail investor will have some leverage when it comes to low cap altcoins (institutional investors don't have the liquidity to build positions), but your big caps are going to be a problem.