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Showing results for tags 'risk profile'.
Back in April & May this year, when the big money really started getting in to crypto, I began noticing extreme correlations between various currencies. These movements were far too fast to be replicated by human eyes and fingers, so I concluded that they were bots. At around the same time, I was approached by an organisation which, as they put it, "invested in baskets of cryptocurrencies" according to my risk appetite. They had algorithmically designated all the various cryptocurrencies as being either high risk, medium risk or low risk. They may have had other categories as well, though I can't recall all the details of the conversation. I did end up investing with them though, and got in early on a couple of ICOS for which they had some sort of preferential / promised allocation in place. The reason I mention this is that I see it happening again. The correlations are back to being around 95%+ between various groups of currencies. For example, take a look at the price action of DGB, then compare it to SC. Similar risk profile. You will immediately see what I'm talking about. This is not human eyes and fingers, but bots automatically bidding/selling at exactly the same time to either take the price higher or lower at exactly the same time. The same is true of BTC, ETH and XRP right now - and because these appear to have a similar risk profile, they all move together. They will, of course, not move at the same time or in the same way as differently-profiled currencies. We've just seen a huge spike up in XRP of course, and that wasn't replicated in ETH or BTC. The bots are probably employing some form of sophisticated AI which can take into account sudden decoupling events based on news/announcements. I imagine this would be some form of sentiment analysis which examines news links, the reputation(s) of the entity/(ies) posting the link; the proximity and prevalence of positive and negative keywords etc. I have built a tool like this myself in the past for a social profiling business, so I certainly know they exist. I'm not saying that the correlation will always be there... but at the time of writing, we're looking at approx 100% price movement correlation. What can we take from this? Well. Two things: 1. To be very on guard, watching/waiting for news or events that impacts BTC's price negatively. Such as the current battle between BTC and BCH. Be aware that ETH and XRP will move in the exact same direction in the absence of positive news. Support levels in TA do not appear to matter. 2. Someone (could be human, but probably AI) believes that these three currencies, and possibly others as well, are in exactly the same (or very very close) risk profile category, hence the correlated moves. That's either worrying or encouraging I guess, depending on your outlook. Here is a USD chart example for past three days (faded background is Bitcoin/USD, opaque is XRP/USD). Shows a 99% price direction correlation, and a 95% price movement correlation.