Financial news wire Reuters says it will be using online chatter-analyzing algorithms to track sentiment about cryptocurrencies on hundreds of investment, news and social media websites.
Reuters will launch the “Bitcoin sentiment gauging index” in partnership with MarketPsych Data LLC.
MarketPsych Data is a financial and investment behavior research company that analyzes more than 2,000 news sites and 800 social media sites related to finance and investment.
Reuters has used such sentiment-gauging indices from the company more than six years now. The difference is that one will specifically track sentiment concerning cryptocurrency.
Data will then be analyzed and used to create financial models and signal markers. Speculators and investors in cryptocurrencies can use that data to gauge their actions against market activity.
Reuter’s new cryptocurrency sentiment index will autonomously and digitally more than 400 websites and news outlets that specifically pertain to cryptocurrencies and online user sentiment.
“Each site is scanned and scored in true-time,” as to better gauge, “market-moving sentiments and themes,” the news service said in press release.
“News and social media are driving the investment and risk management process more than ever with the continuing rise of passive and quant-driven trading,” said Global Director of Thomson Reuters’ Quant and Feeds Austin Burkett in a statement.
“As the financial marketplace rises in complexity, so too does the need to provide our clients with not only the relevant data, but the tools to help them manage and analyze that data. MarketPsych 3.0 helps deliver another layer of analysis and value-add in the investing process.”
A “quant” is a financial industry shorthand for a quantitative analyst.
The use of algorithms and bots to collate and analyze data related to banking and investment is not a new phenomenon.
Robo-advisors, online autonomous bots, and algorithms designed to make financial and investment decisions were used exclusively in the late 1980s and 1990s by financial advisers and stock traders.
Since the dawn of the digital age, however, robo-advisor services have become commonplace.
Reuters new cryptocurrency-centric sentiment index and data feeds are an industry attempt to better understand and gauge the movements of extremely volatile cryptocurrencies such as Bitcoin.
In December 2017, the cryptocurrency market trading value of Bitcoin flirted with the $20,000 mark. Bitcoin’s trading value has fallen and outrageously whipsawed ever since.
Since December Bitcoin has fallen below the $6,000 trading value mark, as well as surged above $11,000 at times.
Reuters cryptocurrency chatter-tracking indices also will provide investor analysis data feeds on other digital currencies such as Bitcoin Cash, Ethereum, Litecoin and Ripple.