Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
This sentiment-driven trading platform by eToro will advance machine-learning techniques to analyze investors perceptions.
Global investment platform eToro has announced its new sentiment-based crypto portfolio offering called TheTIE-Long-Only. For this, eToro has joined hands with a data analytics platform The TIE which can formulate an algorithm-based investment strategy.
The input data for this sentiment-driven trading platform will be Twitter mentions. The social media platform Twitter has been the main platform for discussing crypto activities. Several popular analysts and companies share their trading strategies on Twitter.
Today we're excited to announce our latest CopyPortfolio partnership with @TheTIEIO. Ever wanted to trade based on Crypto Twitter sentiment? Well, now you can. https://t.co/aCtY4bdbTD pic.twitter.com/hIMVrLrQ3h
— eToro US (@eToroUS) October 15, 2019
The strategy implemented by TheTIE includes trade opening only on the positive sentiment signals available on Twitter. Its mechanism uses advanced machine -learning techniques with rebalancing done on monthly basis algorithmically. Guy Hirsch, US Managing Director of eToro, said:
“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.”
Algorithmic Trading Based on Historical Outperformance
The official blog post from eToro mentions that the TIE has developed “algorithmic cryptocurrency trading models powered by the wisdom of the crowd which has achieved significant historical outperformance and reduced risk as compared to an equally weighted benchmark”.
eToro believes that the crypto fundamentals are still on a maturing phase. For now, they have no dividends, revenue, or debt. Thus, social sentiments based on people’s perceptions play an important role in assessing cryptocurrency price movements. Joshua Frank, CEO of The TIE, said:
“eToro is well-known as a community where some of the smartest crypto traders share insights and strategies. We’re proud to offer investors of all experience levels a way to employ artificial intelligence and machine learning in an automatically-executed strategy, unified with eToro in our goal to make traders more active and informed.”
According to the media, TheTIE-LongOnly portfolio selects any of the 13 different cryptocurrencies for algorithmic trading. These cryptocurrency options include BTC, ETH, XRP, IOTA, BCH, NEO, ETC, DASH, EOS, XLM, LTC, ZEC and ADA.
However, the main challenge for TIE’s algorithm will be filtering the real tweets from the fake ones. Frank knows that a major of the Twitter activity is fraudulent due to the presence of bots. “We’re actually eliminating about 90% of tweets because we think they’re coming from bots or people trying to manipulate the market. We have to identify and assess the relevance of each individual tweet,” said he.