MarketsandMarkets values the global artificial intelligence market at $371.71 billion and expects it to exceed $2407.02 billion in value by 2032. The statistic clearly demonstrates how AI technology can affect many sectors, including cryptocurrency.
The Business Research Company reports the generative AI market in the cryptocurrency space alone is expected to grow in value from $760 million in 2024 to $1.02 billion in 2025. That’s a CAGR of roughly 34.5%. As readers will know, artificial intelligence boasts an unusual computational ability that helps it extract meaningful insights in real time.
In terms of the ADA price, for instance, AI can help traders make more informed predictions about future price movements by combining historical performance, market trends and other data points. And that’s just scratching the surface – there’s much more to how AI is reshaping this space.
Providing better security
Cyberattacks are a growing concern in industries, and cryptocurrency is no exception. There are more than approximately 940,000 attacks daily worldwide. In the cryptocurrency industry, issues like private key compromises have surged in number , and compromises accounted for almost half (43.8%) of stolen cryptocurrency in 2024, with the total number of stolen funds rising by about 21% that year.
Since bad actors reinvent themselves constantly, ignoring cybersecurity can have serious consequences, especially for cryptocurrency exchanges. One example may be the loss of security-conscious customers. According to cxscoop.com, up to 21% never return to brands that suffer cybersecurity incidents.
Given the competitive nature of the cryptocurrency industry, such losses can be fatal to companies, and at best, recovering after cyberattacks can be challenging. An IBM report reveals that companies may need at least $4.88 million to recover, which is why many cryptocurrency companies are turning to AI for better protection.
AI excels at pattern recognition, making it highly effective in detecting fraud. It examines data like transaction histories and IP addresses to identify malicious activity in real time. For example, blockchain analytics firm Elliptic recently noted potential money laundering on the Bitcoin network after training an AI model using data on about 200 million transactions.
The rise of smart trading bots
Gathering and processing all the data needed for accurate trading decisions or anomaly detection is no easy task. Errors and delays are common, but AI can quickly assess vast amounts of information and deliver results more quickly than human workers.
Many cryptocurrency traders have turned to artificial intelligence as their new hope, leading to the expansion of the global AI cryptocurrency trading bot market, which Research and Markets values at $40.8 billion. If this trend continues, the market could hit $985.2 billion in value in the next few years, translating to a CAGR of 37.2%.
Bots can examine large amounts of data, including social media sentiments and global news, and make predictions that give traders a serious edge.
But despite such benefits, it doesn’t mean AI is 100% accurate; it needs close monitoring and strategy adjustment to avoid inaccurate predictions.
Are there any challenges?
According to a ResearchGate publication by Halima Kure and others, data poisoning can reduce classification accuracy in fraud detection models by 22%. Such instances manipulate AI models and can be used to initiate fraudulent transactions.
Another common concern with AI algorithms is the ‘black box’ problem. When users don’t understand how an AI system makes its decisions, trust erodes. In an industry like cryptocurrency, where trust is everything, users can perceive trading bots as untrustworthy. Security.org claims that 40% of cryptocurrency owners have doubts about digital currencies.
Cryptocurrency’s volatility and extant unpredictable socio-economics create challenges for artificial intelligence’s ability to make accurate predictions. If AI’s analytical abilities are overestimated, costs will mount up, regardless of trading strategies.
Future developments may address some of these challenges, with observers suggesting AI may continue to dominate the cryptocurrency space.
Cryptocurrency companies have been using the technology to improve security measures through real-time monitoring. AI technology can detect an attack before it happens, helping companies avoid significant financial losses. Plus, artificial intelligence’s computational ability can help investors improve prediction accuracy. By gathering and assessing data from numerous sources, the technology offers real-time insights – something that once seemed out of reach.
