The Coinbase exchange revealed today a tool which predicts crypto market moves by aggregating data from its own exchange.
The tool will use indicators derived on the activity of large trading whales, the average hold time for a given asset, and the performance of “correlated” cryptos.
According to a blog post, Coinbase.com will offer free service starting with today. Even though the exchange admitted that it no one can forecast “what crypto prices will do,” Trading Signals was designed “to provide accurate, objective measurements of cryptocurrency usage based on the aggregated and anonymized activity of millions of Coinbase customers.”
Traders often analyze sentiment to try to predict cryptocurrency markets. Social platforms usually show bullish or bearish sentiment, with prediction markets such as Augur and Gnosis allowing traders to wager on future prices.
Coinbase has three types of “trading signal.” The first one is called “top holder activity” and it tracks the movements of Coinbase’s top ten percent users in a 24-hour period. By monitoring the big trades of the platform, this could help users find possible future market trends.
The second trading signal is based on the crypto’s “popularity,” by determining the length of the period for which a crypto token was kept on Coinbase’s wallets on average. But Coinbase warns again that this is not an accurate way of predicting popularity.
“Keep in mind that Coinbase has a wide diversity of customers, with a variety of factors driving their asset hold times and which assets they find interesting,” says the exchange.
The last trading signal is “price correlation,” which tracks the movements of coins and alert users of cons with similar trajectories.
Even though trading signals are helpful tools to formulate a trading strategy, one should not completely base its trading on this, as no one can predict the crypto market.
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