Crypto Trading Strategies: Five Lessons from AI Traders


Artificial Intelligence (AI) has taken the world by storm with and traders are saying it can become a vital tool when trading crypto. Here are the five lessons professionals have shared with us.

The capabilities of artificial intelligence (AI) have taken the world by storm, and the trading industry is no exception, especially in the cryptocurrency world.


According to a PWC report, by 2030, AI has the potential to contribute $15.7 billion to the global economy. Meanwhile, the revenue from the crypto industry could reach $1.1 trillion by that same year, research conducted by GlobalData showed.

Without a doubt, merging these two industries could become groundbreaking, and many investors are already using a number of AI tools at their disposal to help them conduct their crypto trades.


Here are the five lessons AI traders have shared with us.

Crypto Trading Is a “Confined Learning”

Daniel Guan, the CIO at Kvants AI, a decentralized asset management platform that offers access to AI-enabled trading strategies, told Technopedia that one of the critical lessons crypto traders should keep in mind is that cryptocurrency trading is a “confined learning.”

According to Guan, what essentially AI is doing when used for crypto trading purposes is that it is trying to understand how the token is moving and how a particular user can benefit from that.

Machine learning is learning what it needs to know, like all the token prices in crypto and altered financial instruments, prices in the traditional world, and all sorts of macroeconomic news. In that sense, when AI learns this content, it generates models that try to predict price movements and then goes trading.

What this essentially means is that in order for a crypto trader to succeed in their job, they must first understand how the cryptocurrency they are trading is moving, what are some key factors that are affecting its price, and how could the cryptocurrency react to any upcoming news.

Karlis O (the last name redacted due to privacy concerns), CEO and co-founder of Valio, added that large language models (LLMs) in the likes of ChatGPT could become great tools in helping investors form a basic understanding of something they may not be too familiar with.

The most obvious way is to use [large language models] as leverage to do fundamental research. For instance, if you are looking to trade a particular vertical and you are not very familiar with this vertical, large language models are your shortcut way of getting the 80/20 or something on things that are novel to you.

AI Helps With Spotting Trends

One of the biggest upsides of using AI when trading crypto is the technology’s ability to analyze vast amounts of data in significantly short amounts of time. This skill helps AI crypto traders with decision-making in cryptocurrency trading, Vikas Kaushin, the CEO of TechAhead, told Technopedia.

AI assists in spotting patterns and trends in the market that human traders may overlook because of cognitive biases. This provides more informed judgments that are supported by data, which eventually leads to better outcomes from trading.

Karlis added that the majority of AI tools used when trading crypto is specifically tuned to focus on market signals, whether those are analyzing Twitter data, looking at the semantics of what is going on in the market, or analyzing heat maps of the sentiment.

Crypto Trading Is 24/7

Unlike traditional markets, cryptocurrencies are trading 24/7, which could potentially be one of their trickiest aspects. No trader is able to stay up for 24 hours, seven days a week, meaning that many could potentially lose on great buy or sell opportunities during times when they are unavailable.

Kvants AI’s Guan noted this is why they have developed an AI-helping tool that aids investors with monitoring the crypto market 24/7.

We actually have a license in Singapore that allows us to manage the assets for our small clients. In that sense, clients’ assets are aggregates in finance, so like a custody service, such an aggregated account is managed by AI strategies that can react very fast to the market.

Traders Have to React Fast to Market Trends

It is a truth universally acknowledged that cryptocurrency markets are highly volatile, which means that crypto traders must be quick when it comes to making important decisions.

Relaying his past experience in traditional finance, Guan noted that if crypto traders rely on some traditional financial strategies, their judgment may not be reactive enough for the volatile crypto market.

AI and machine learning are actually very suitable for this world because they can provide swift reactions and an adaptive learning environment to work with. In that sense, whenever something new happens to a cryptocurrency’s price, traders can always learn something and try to react to it.

Karlis added that large language models can also be useful here as they serve as an advantage in the velocity of comprehending information.

“Of course, you have to factor in the level of expected error, but effectively, you can think of it as doing diligence faster.”

Risk Tolerance Is Vital

AI’s ability to quickly analyze big data sets has another major pro – the ability to spot and potentially mitigate risks.

TechAhead’s Kaushin explained:

AI traders can implement particular risk management measures, such as stop-loss mechanisms, portfolio diversification according to an investor’s risk tolerance, and real-time monitoring, to effectively reduce the likelihood of potential adverse outcomes.

Moreover, Guan said that risk management is a key issue in the financial industry and should be a key priority for crypto investors, too, especially because of the high volatility that the industry experiences.

When a risk event happens [in crypto trading], investors need to decide whether they reach this event or not. And if they choose to react, they must react as fast as possible. That is why AI has an advantage, as it can make decisions based on the information it has processed over the years.

The Bottom Line

Overall, trading crypto using AI could become a fun experience; however, before one starts incorporating AI into their crypto trading strategies, they must build a solid basis in both the fundamentals of crypto trading and the technologies associated with AI, Kaushin stressed.

Karlis added:

AI tools make humans more productive regardless of what their avenue of pursuit is, whether they trade, whether they build companies, or whether they engage in any other form of activity.

AI and crypto technologies are constantly evolving, so staying at the top of your game and adjusting your crypto trading strategy is very important for every trader.


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Iliana Mavrou

Iliana graduated from City, University of London with a degree in Journalism in 2021. Since then she has been covering the crypto, finance and tech industry for a number of publications. This includes, where she reported on complex topics related to blockchain technology and the cryptocurrency sphere in general. Iliana is currently completing a Master's in Communication.