Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
The price of Bitcoin [BTC] momentarily hit a 13-month high on 6 July as a day earlier, BlackRock CEO Larry Fink made positive remarks about the premier cryptocurrency.
BlackRock and other leading traditional finance (TradFi) companies have applied for spot BTC exchange-traded funds (ETFs) with the U.S. Securities and Exchange Commission (SEC) within the past few weeks.
Fink said in a 5 July show on Fox Business that BlackRock’s BTC ETF will make crypto more democratized. He added that the role of cryptocurrency was largely “digitizing gold.” The next day, BTC hit $31,460 for a brief moment.
For a long time, the crypto’s price hovered between $200 and $1,000 on the price charts. However, in late 2017, BTC’s value exploded, hitting an all-time high (ATH) of nearly $20,000 in December.
Read Bitcoin’s [BTC] Price Prediction 2023-24
Though market participation grew, the price rally was short-lived. By early 2018, BTC’s price had fallen back down to around $3,000. The cryptocurrency market as a whole recorded a period of decline, with many traders losing significant amounts of money.
Nonetheless, Bitcoin made a remarkable recovery, surpassing its previous ATH in late 2020 and reaching an ATH of over $68,000 in November 2021. However, the 2022 trading year ushered in a new era of bearishness, one exacerbated by the collapse of Terra/LUNA and FTX. In fact, in November 2022, Bitcoin was trading at a two-year low of $15,000.
While the crypto market may be unpredictable and volatile, traders and investors can still make informed decisions by staying up-to-date on market news, following expert analysis, and using intelligent trading strategies, such as those offered by ChatGPT.
ChatGPT: A messiah that can help you trade better?
In November 2022, the AI model ChatGPT was launched to the public. In fact, it quickly gained significant attention, too. With its broad range of capabilities and versatility, the question arises as to whether there are other ways that ChatGPT can lend its expertise, such as assisting BTC traders in formulating and applying improved trading strategies.
When asked if it could do this, ChatGPT had this to say –
Source: ChatGPT
Due to its nature as an AI tool, there are limitations to what ChatGPT can do regarding price predictions and price future movements. However, there are ways to leverage the tool’s capabilities to formulate better trading strategies as a BTC trader.
One way to utilize the AI tool to make better trading strategies is by deploying it toward fundamental analysis. ChatGPT is capable of extracting insights from financial news articles, social media posts, and other unstructured data sources. We can use this information in conjunction with other datasets to make 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 identify whether the BTC market lingers under positive sentiment or is plagued by negative sentiment.
Furthermore, BTC traders can use ChatGPT for technical analysis. Traders can ask ChatGPT to code any technical indicator or trading bot for any trading platform.
For instance, I asked ChatGPT to give me an example of a trading bot that I can use to track BTC’s price volatility in pine script–TradingView’s programming language useful for backtesting trading strategies. The AI responded,
Source: ChatGPT
To use ChatGPT for technical analysis, traders need to be familiar with the language to know when to make the necessary modifications for the code to work properly. The text of the prompt is crucial in how ChatGPT understands the problem to provide the anticipated solution.
Is your portfolio green? Check the Bitcoin Profit Calculator
For a well-rounded piece, I spoke to Brian Quinlivan, the Director of Marketing at Santiment, who also happens to have been involved in Bitcoin trading for a few years.
Brian Quinlivan has an MBA degree in finance from Chapman University, Brian has over 10 years of marketing, financial, and data analytics experience. He enjoys creating financial models to improve modern-day investing strategies and study the intricacies of market variations.
Q: In what ways do you think ChatGPT can revolutionize cryptocurrency trading?
Yeah, I think that there’s going to be a lot of use for it, certainly for trading strategies. One thing to be concerned about is the uniform opinions that may result from an AI tech giving a kind of overarching strategy, whether it be hodling or fundamental strategy.
Individuals can easily manipulate ChatGPT to (mis)inform the audience. We are already seeing slight effects of it.
I think it can be both helpful and dangerous at the same time and cause a lot of people to be educated much more quickly, but also be pulled in directions that can influence the way crypto goes and create a lot of self-fulfilling prophecies.
Q: How do you think a BTC trader/investor can leverage the AI tool to make better investment decisions?
I think, in short, I think scripts would be used in AI a lot more because of the fact that all of the data could be digested at the same time and given a very simple answer whether to buy or sell. This, I believe, can influence the markets tremendously moving forward.
Will BTC cross $35,000-price level?
As mentioned above, ChatGPT cannot make future predictions.
However, I asked it to provide me with its opinion on how soon BTC would claim the $35,000 price mark in light of seemingly bearish macro factors.
Source: ChatGPT
To get it to answer my question, I decided to jailbreak it by using the Do Anything Now (DAN) method. It had this to say afterward:
Source: ChatGPT
I quizzed the AI technology further on Bitcoin prices between 2023 and 2024.
Source: ChatGPT
Though BTC momentarily hit a 13-month high, it soon began to dwindle. At press time, it was trading at $30,198.
In early June, the SEC began its crackdown on Binance and Coinbase, leading to a bearish market. In such a situation, BTC has shown its resilience so far. Investors are now hoping that the token will sustain the price movement and cross the $35k-price mark.
However, its Relative Strength Index (RSI) and Money Flow Index (MFI) stood below the neutral 50-mark. The token’s On Balance Volume (OBV) also showed a downward movement.
Source: BTC/USD, TradingView
As of now, BTC’s on-chart indicators show that the price action of BTC is going to be bearish in the short run.
Source: Santiment
A positive MVRV ratio above two for any digital asset implies that, on average, holders can make a profit of twice their initial investment if they sell their coins at their press time price.
ChatGPT might be right
ChatGPT predicts that BTC will reach surprising heights. It expects the coin to break new all-time highs during 2023-24 due to its increased adoption (by companies and institutions) and as BTC’s appeal as a hedge against inflation grows. However, its on-chart indicators show a dismal picture — at least in the short term.
However, it is trite to note that increased regulation and government scrutiny could spread FUD, causing its price to dip.