Coronavirus (Covid-19) increases the demand for trading bots and their adaptation to the cryptocurrency market

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Coronavirus increases the demand for trading bots and their adaptation to the cryptocurrency market

The decline in markets due to coronavirus contributes to increased demand for trading bots and adaptation of algorithms to cryptocurrency trading.

The use of automated trading systems (trading bots) with high market volatility is usually not recommended. But Asif Razaq, head of the BNP Paribas currency trading automation division, has the opposite view. He said that the average daily volume of customers using their algorithm for automated trading has recently increased by 150-200%. A similar trend was noted by other banks – Deutsche Bank, Societe Generale and JP Morgan.

Such an increased interest in trading bots may be due to the fact that, being at home in isolation mode, traders and asset managers have difficulty organizing trade, so they try to automate the process as much as possible.

At the same time, some experts believe that trading bots can adversely affect centralized and decentralized cryptocurrency exchanges, since due to the inherent crypto assets volatility and lower liquidity on exchanges, they are more susceptible to manipulation compared to traditional markets.

The most advanced banking bots are able to adapt to new conditions, adjusting their parameters. According to the head of the macroeconomic department at JP Morgan, Chi Nzelu, the algorithms “evolved” and began to scan trading floors in search of the best strategies, while providing investors with real-time information.

Richard Purssell, Head of Insight Investment Trading, believes trading bots can outperform human capabilities. However, even if a machine can “at the speed of light” identify changes in quantitative data, then, unlike a person, a bot will not be able to take into account political and macroeconomic factors. Given that the coronavirus crisis will continue for a long time, and the crypto assets market will continue to fluctuate, cryptocurrency bots will have enough time to adjust to new conditions.

According to a study by Cornell University last year, arbitrage bots are widely used in manipulative profit strategies on decentralized exchanges.