Home Community Crypto, Trading, Investing, and Technology Effect of crypto-ml on crypto trading market dynamics and on its own success Reply To: Effect of crypto-ml on crypto trading market dynamics and on its own success

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JustinJustin
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@archird101, I love this question! This is the exact sort of discussion we (perhaps embarrassingly) end up having during dinner parties.

There is a real ethical component to this.

As context, the Bitcoin market is now *very* big. Bitcoin has somewhere around a $185 billion market cap with great liquidity. It takes a lot of money to move the Bitcoin market. There are some interesting post and discussions on how much it takes to move the market–but it’s largely speculation. Once person calculated this out and came up with that it takes around $23M worth of bullish trades to raise price by 0.5%.

With that context in mind and the idea that there will always be competition in the *retail* trade system space, I expect it will be very hard for customers of a single system to “take over” the market.

Personally, I’m more concerned about “less than honest” institutional investors and exchanges.

That said, the question you raise is definitely a conceivable problem–that a trading system could put together different components and take actions that help it achieve its own goals.

For example:

We have the Market Index. It has a goal of predicting the next 30 days. It gets a “cookie” when it gets things right–so its mathematical goal is to maximize the cookies it gets.

We also have the Trade Alerts. They have the goals of maximizing portfolio balance.

Currently, these systems aren’t aware of each other and can’t talk.

However, if the two were aware of each other *and* could move enough money to influence the market, they would begin working together to achieve their goals via manipulation.

I imagine it result in a market that moves up and down with a 60-day wavelength.

To take it a step further, other systems would begin picking up on this trend, so the best system would end up being one that can adjust its own goal parameters.

Whatever the case, I think it’s going to be a crazy future ahead. 🙂