Social trading network eToro is ramping up its cryptocurrency offering through a fresh partnership with crypto-focused data analytics platform The TIE. The joint venture includes the launch of a new product called ‘TheTIE-LongOnly CopyPortfolio,’ which provides retail clients with access to a sentiment-based, aIgo-driven investment strategy.
To help identify the predictive value in the new chatter-tracking fund, The TIE team, powered by expertise in data mining, has developed a new range of sentiment indicators and social insights. Their product tracks millions of data points and converts a variety of professional news into quantitative analysis for investors to distinguish between patterns across their respective digital assets.
TheTIE-LongOnly CopyPortfolio strategy allocates to cryptocurrencies based on positive sentiment generated by the immense amount of social media content, algorithmically rebalancing once per month. The capabilities of sentiment analysis can be used to create buy and sell signals for a crypto asset, which will anticipate price movement by comparing current sentiment with historical averages.
Generally speaking, sentiment analysis in investment spaces is an application of machine learning where quantitative traders can capitalize on social media influence through monitoring the overall volume of relevant news and the mix of positive, negative, and neutral comments.
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Democratizing the crypto market
Earlier last year, Thomson Reuters launched a new version of its MarketPsych Indices (TRMI) to include market sentiment data for the top 100 cryptocurrencies. The stated goal is to encourage efficiency and transparency for the virtual asset investors within the global marketplace.
“With crypto, the only thing that really moves it is supply and demand, so we set out to develop sophisticated solutions for hedge funds to help value and trade the asset class,” said Josh Frank, chief executive officer of The TIE.
“The end result is that retail investors will have the chance to invest using a strategy that was previously only available to hedge funds,” said Guy Hirsch, US Managing Director of eToro.
The Israeli social investment platform has had a string of recent announcements in a major push to attract crypto traders and grow its user base. Earlier this year, Gibraltar’s financial services watchdog has awarded its cryptocurrency arm, eToroX, its bespoke license for blockchain firms using distributed ledger technology.
“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,” added Hirsch.