Crypto Twitter maybe a cute marketing term referring to the cryptocurrency community on Twitter but developers are noticing that this crowd may be a gold mine for investors. The cryptocurrency space is still nascent which means that so far very few tools and methodology if any work accurately to predict future price movement. eToro wants to show a new way.
However, savvy investors have realized that sentiment plays a major role in the price of any cryptocurrency and therefore to take advantage of the influential Crypto Twitter crowd, social investment and trading platform eToro partnered with blockchain analytics and financial startup The Tie to create a tool that mines this sentiment and interprets it to predict bullish price movements.
As expected the tool relies on advanced machine learning techniques and natural language processing technology to analyze more than 850 million tweets posted every day and sort them according to relevance and sentiment. The tool, dubbed TheTIE-LongOnlyCopyPortfolio then has to separate tweets by bots and irrelevant marketing messages to end with positive tweets on which the tools bases its trading signals.
“All you need to do is click one button and you can copy these sophisticated trading strategies trusted by some of the world’s leading hedge funds and institutional investors,” said Joshua Frank, co-founder, and CEO of The Tie.
eToro and The Tie made the announcement on the launch of the tool on Tuesday in a blog post saying that social sentiment has become a significant indicator of crypto-asset price movement. Guy Hirsch, who is the US Managing Director of eToro said in a statement that,
“In traditional markets, retail investors have historically lagged behind the ‘smart money’ when it comes to the data and tools available to them… This puts individual investors at a major disadvantage. In the spirit of crypto and decentralized technology, we believe that offering institutional-grade tools to every investor will level the playing field and democratize investing.”
According to the blog post announcement, the trading strategy was launched in October 2017 and so far has returned positive results generating “281% return after fees, compared to a 41% return generated by Bitcoin alone.”
In addition, eToro stated that,
“Annualized, The TIE’s Long-Only portfolio strategy generates on a return of 123% on average, compared to a 29% return from an equally weighted basket of the same underlying crypto assets.”
So far so good then. As stated by eToro this tool is aimed at leveling the playing field between institutional and retail investors.