Leveraging Web Scraping for Cryptocurrency Trading
The price of bitcoin hit an all-time high of $5840.30 on last Friday, surpassing all the previous records. Also, the combined value of all bitcoin in circulation hit a peak of $96.7 billion. The prices of other cryptocurrencies are also on the rise. Despite being referred to as a ‘bubble’ by many of the popular names from the tech industry, cryptocurrencies like Bitcoin have remained strong and their prices usually recover in spite of the roadblocks resulting from external factors.
What are cryptocurrencies?
Cryptocurrencies are a form of digital currency that relies on blockchain technology for its operation on a decentralized network model. Simply put, they are an anonymous financial system that facilitates money transfer between individuals/companies without compromising on the security aspect. Instead of using traditional payment methods such as cash or credit cards, you can now make payments using a cryptocurrency like Bitcoin. Although bitcoin is the most popular one, there are now thousands of options to choose from. Some of the popular ones are:
- Bitcoin cash
- Ethereum Classic
With cryptocurrencies becoming increasingly popular lately, traders have realized the immense opportunity that can be unlocked by smartly investing in cryptocurrencies. However, there aren’t many reliable trading platforms out there for cryptocurrencies. With cryptocurrency trading, you are pretty much on your own and have to anticipate the risks and opportunities by watching the market closely. Web crawling can be a great tool for keeping track of the details of multiple cryptocurrencies. By setting up a web crawling system, you can easily have ready access to crucial information that would help you trade safe.
How web scraping can help
Web scraping is the same technology that helps search engines in finding and indexing new information added to the web on a continuous basis. Web scraping is currently used by businesses to extract critical data from the web to power their big data strategy. As of now, there are thousands of different cryptocurrencies out there and keeping track of their prices can be overwhelming. This is where web scraping can help those looking to leverage the opportunities presented by the cryptocurrency world. Web scraping can help in:
Gauging price volatility: The volatility of a cryptocurrency is the measure of its responsiveness to the market events. When it comes to cryptocurrencies, this is denoted by beta value. If you are into cryptocurrency trading, you’d want to go for risk-free investments.Just like the mainstream financial industry, beta value of 1 means a more volatile currency with high risk. Whereas, a value lower than 1 is less volatile and hence has less risk associated with it.
Beta analysis is done to evaluate your portfolio for finding low risk, high returns currencies. To find a winner, you would need the historical price data for all the currencies under consideration. Web scraping can be used to extract this data from cryptocurrency comparison websites like CryptoCompare or the official websites of the respective cryptocurrencies.
Keeping track of cryptocurrency prices: Cryptocurrency traders would obviously want to keep track of the pricing of the cryptocurrencies in their portfolio. This price data will help them stay up to date with the movements in prices. Price monitoring is also crucial to take time sensitive decisions while trading currencies.
Predictive analytics: Predictive analysis is a subset of advanced analytics and is used to predict future events by connecting the dots. Predictive analytics employs various techniques from statistics, data mining, modeling and machine learning. Simply put, it is the technique of predicting future trends from current data. A smart trader should be able to see into the future by making predictions from the present day trends. This will prove to be extremely useful in unlocking the full potential of cryptocurrency trading. With the necessary data associated with cryptocurrencies extracted from the web, you can run various predictive modelling techniques on top of it to gain a competitive edge in cryptocurrency trading.
Identifying the factors influencing cryptocurrency prices: When trying to leverage cryptocurrency trading, it is essential to identify the different factors that affect the price of various cryptocurrencies. By understanding the relationship between different factors and the value of a cryptocurrency, you can easily make predictions that would make way for smarter cryptocurrency trading. Some of the common and known factors that generally affect most currencies are government regulation, media influence, stability of the network, mass acceptance and technological changes.
One recent example of technology affecting the price of cryptocurrency is when IBM launched a blockchain-banking solution to help financial institutions process cross-border payments more efficiently, cutting down both the cost and settlement time of transactions. The announcement immediately led to the stellar lumens cryptocurrency (Used by IBM) to an immediate surge. This shows how new technological innovations can help cryptocurrency value shoot up.
Despite the negative media about cryptocurrencies, they have come a long way and have been adopted by reputed tech companies from around the world. Looking at the steady growth of Bitcoin since it was launched in 2009, it’s a solid project that won’t go down soon.
One of the best examples to back this claim is the Enterprise Ethereum Alliance, which is a group of companies collectively seeking to use blockchain technology to its full potential. It is based on Ethereum, an open-source, public, blockchain that anyone can use as a decentralized ledger. It has its own cryptocurrency called ether, but the underlying Ethereum network is what is attracting companies’ interest. In any case, Blockchain-backed cryptocurrencies are here to stay.
Hence, calculated risks in crypto-world can yield substantial returns.If you are trading cryptocurrencies, using some extra help from technologies like web scraping will enable you to stay ahead of the curve and bring out successful results.