NEWS

Like Traditional Markets, Cryptocurrency Trading Likely on Autopilot

In 2000, Goldman Sachs, one of the US’s most significant cash equities trading desk, had 600 traders. In 2017, only two equity traders were operating the floor, supporting automated trading programs. Two hundred computer engineers, in return, found new positions at Goldman Sach’s New York headquarters.

Unlike traditional markets, crypto trading market has not had to go through the whole evolutionary process. Invented at the peak of the computer age, crypto trading bots have integrated with it, without much disruption.

Trading bots generally use computer algorithms to search out and recognize trading trends. At first, these tools of the trade were the preserve of well-endowed hedge funds. Their use has, however, ballooned with time.

As an illustration, JP Morgan estimates that it is a paltry 10 percent of all trades today that are executed by humans. Bots execute these trades at an inhuman speed for profit. They not hindered by intuition, past experiences or emotion but rather by data. This means that they will hardly veer off course when trading pressure mounts. 

Cryptocurrency Trading Bots on the Rise

These bots are now available for use by private investors in the crypto market. With cryptocurrency prices rising by the day, there has never been a better time to integrate bots in crypto trades.  Coinbase’s user accounts have, for instance, eclipsed those of the Charles Schwab Corp. As cryptocurrency awareness increases, so will digital asset traders and overall market cap.

Digital currencies started as a rebellion against “The Man.” Savvy traders, nonetheless, have found one use case that brings much ire and excitement in equal measure in the crypto-verse. They have become an investment class for profit-minded individuals and institutions. Bitcoin, for instance, has been bringing in more returns than any other asset class out there in 2019. 

Digital currencies, however, are incredibly volatile. This means that the emotion that drives traders to the brink in traditional markets is amplified in the crypto market. The term HODL was coined to steady lads watching their cryptocurrency fortunes rise and crash in moments.

Bot trading is “evil”

If crypto bots took over, trading traders would not need to concern themselves with the volatility. They could use this feature to maximize their returns and minimize trading mistakes.

Another reason to have bots in cryptocurrency trading is the competition that established old-world money market traders are bringing to the market. The cryptocurrency market has been a niche market of technology fans and computer scientists. These are not professional traders. Bots can give them an edge in the growing market.

Not every crypto fan, however, thinks that trading bots in crypto is good news. This move will hand over cryptocurrency profits back to 0.01 percent of the world’s population that has been living off fiat manipulation. While there is no data to ascertain just how much of crypto trading is run by bots, pundits predict that the numbers are high.

This is especially so, in the light of the massive long and short liquidations happening on exchanges. One Reddit user says:

“I view this type of trading as evil because rich corporations can afford the computers to do it, but average humans can’t. Some computers place orders and cancel them a tenth of a second later. It is part of manipulating prices”.

Dalmas Ngetich
About author

Loving Crypto, Open to Technology, Engineer, Trader
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