Media giant Thomson Reuters is looking at cashing in on the predictability of a market whose price cycles are based on merely more than emotions and psychology.
Reuters announced this past Monday that they will be adding bitcoin to their program that allows investors to view price predictions based on analyses from their MarketPsych Indices. Reuters, in conjunction with MarketPsyche Data Inc., analyzes actionable data ranging from the bond markets to the stock markets by analyzing the sentiments surrounding the pricing within those markets.
The program uses metrics common in emotionally based investing like greed, joy, trust, and fear, to create an investment recommendation. It analyzes more than 400 sources of data, including that found on websites, social media, and forums, to develop its recommendations.
The system is further explained in their MarketPsych Indices product report:
“Thomson Reuters MarketPsych Indices analyze news and social media in real time. They convert the volume and variety of professional news and social media into manageable information flows that drive sharper decisions.”
MarketPsych was initially developed by a psychiatrist and quantitative trader named Richard Peterson. The software essentially quantifies human emotion and translates it into actionable data, which may show a new side of AI’s role in crypto trading. Currently, AI is utilized frequently in the cryptocurrency markets using a combination of stop-loss and buy orders to day trade. The current AIs in crypto make decisions based solely on price/volume data, but the addition of Bitcoin to MarketPsych Indices could result in a new element of AI trading in the evolving and easy-to-manipulate cryptocurrency markets.
Many analysts have linked online activity, like the number of Google searches for “bitcoin”, with the price of the cryptocurrency.
“News and social media are driving the investment and risk management process more than ever with the continuing rise of passive and quant-driven trading,” said Austin Burkett, Global Head of Quant and Feeds at Thomson Reuters.