Can You Use Chat GPT To Predict Crypto Market Trends?
With the rise of AI, there have been several articles published claiming that one can used Chat GPT to predict market trends, especially in the cryptocurrency industry. But is this true?
We are skeptical, as it can be truly difficult to predict anything, especially something as volatile as the cryptocurrency market. Keep reading to discover what we think about these trends and whether or not you should create your own predictions using AI.
How to Use Chat GPT to Predict Crypto Market Trends
According to the several available websites, below is the step-by-step process you can use to predict market trends using Chat GPT.
Step 1: Gather Historical Data
First and foremost, you must request a large amount of historical cryptocurrency price data from Chat GPT. Luckily, this is basically what Chat GPT is, and it should be easy to request this data.
We recommend focusing on one token at a time, just to make the following steps easier on yourself. For example, you can start by requesting the price history/trend history of a cryptocurrency like Ethereum.
It is also recommended to download and format the data in a CSV. This makes later steps easier to execute. This is one of the better, and more efficient uses of AI that we cannot fault.
Step 2: Format Your Data
Once you have pulled all your data, it is time to format it. You must make sure it is formatted consistently, and we recommend filling in as many missing values as you can. Additionally, ensure you remove duplicate data to avoid skewing your results.
**This is the step which will make or break your results. We recommend reading about data formatting before attempting to produce any models.
Step 3: Write an Excellent Prompt
After your data has been organized, it is time to prompt Chat GPT to make you a model. We recommend using clear language and avoiding jargon whenever possible. Also, keep your prompts short and to the point.
Here is an example: “Analyze the price of Ethereum using RSI data between March 2023 and December 2023, identifying points where the price matched market indicators.”
If you can’t design a prompt on your own, it can be a good idea to edit an example one to suit your needs. There are other examples in other articles that explain how to use Chat GPT to make crypto prediction models.
Step 4: Double Check Your Findings
After Chat GPT creates a prediction model, it is time to double-check your findings. Because, for as easy as Chat GPT is, remember that it is only able to summarize the information it has. It cannot make inferences without your input. It is also worth noting that there can be a lag between information availability as a whole and Chat GPTs being able to pull from it to answer prompts.
Double-checking your findings will generally require doing some research, some of which we think is several times more intensive than what you have done so far. This is one of the many reasons why we are skeptical of Chat GPT-designed prediction models.
Can You Use Chat GPT to Predict Cryptocurrency Market Trends?
In our opinion, no matter what you do, we do not think it is possible to predict cryptocurrency market trends—whether using AI tools like Chat GPT or other prediction models.
Cryptocurrency is like no other sort of financial market. It is incredibly volatile, and so much of what affects prices simply can’t be predicted—for example, positive government policies being passed in two years to legalize a certain token. Of course, if you know a policy is being drafted, this can be a good time to buy, but this is something you don’t need Chat GPT for.
Additionally, the collapse of certain aspects of the cryptocurrency world, such as FTX, and Terra Luna, are black swan events—meaning no matter how much historical data you pull, you will not be able to predict them. Look at it this way, everything with FTX seemed to be fine until the day it crashed because there was nothing backing the exchange. It was basically a Ponzi scheme, and this is something no one can predict with any certainty.
Therefore, if you want to waste your time using Chat GPT to create prediction models, go right ahead; no one will stop you, and it might even be fun. That being said, we do not recommend using these models to make investments in cryptocurrency. It is simply too risky. Rather, we suggest doing your own research and coming to your own conclusions. Even if this means you end up skipping making an investment entirely.
**It is also worth noting and Chat GPT can only pull from information which is current available and has been available for a certain amount of time. Whether or not this information is correct. Thus, it is highly possible that research being pulled by AI could be a mix of baseless, unreviewed facts mixed with research and you won’t be able to know which is which.
Do Cryptocurrency Markets Always Run on Cycles?
A lot of the articles teaching you to use Chat GPT to create prediction models do so on the principal that all cryptocurrency markets run on cycles. In our opinion, this is never the case.
As mentioned above, while cryptocurrency markets may sometimes seem to follow certain “trends” or “cycles” we believe the moving prices of cryptocurrency are far more nuanced than that. There truly is no way to predict what token will take off next, or which one will end up crashing the following week.
Overall, we recommend leaving the idea of creating prediction markets for crypto behind, as we doubt that an accurate one can ever truly be made. Instead, just use your judgment, watch the news, and invest in projects you believe in. Above all else, remember that you should only invest money that you intend to lose—as any cryptocurrency project could crash at any time, nothing is ever guaranteed.