LONDON (Reuters) - After months of relative calm in cryptocurrency markets, bitcoin exploded back into life in April with its sharpest price jump in over a year - but few people could convincingly explain why. FILE PHOTO: A copy of bitcoin standing on PC motherboard is seen in this illustration picture, October 26, 2017. REUTERS/Dado Ruvic/File Photo The 20% leap focused investors’ attention on one of the enduring mysteries of cryptocurrencies: what moves the price of an emerging asset in an opaque, largely unregulated market? For some, the answer lies on social media. Hedge funds and asset managers seeking an edge are training computers to scrape social media sites for triggers that could move the price of digital currencies. Their goal: crafting algorithms capable of picking out price “signals” from the background noise of sites ranging from Reddit and WeChat to Twitter and Telegram. Many investors already use computer models to identify, and trade, price differences across hundreds of cryptocurrency trading exchanges. But with opportunities for arbitrage narrowing as the nascent sector develops, big players are increasingly looking to build or buy more sophisticated robots to find market-moving signals online, according to interviews with six hedge funds and asset managers and three software developers. Yet while the use of algorithms, or algos, for parsing social media may be growing, some of those interviewed said major challenges and risks remain to their wider deployment, from cost to complexity. “It’s an arms race for money managers,” said Bin Ren, CEO of Elwood Asset Management, which specializes in digital assets and is owned by Brevan Howard founder Alan Howard. “Very few players are able to implement and deliver it, but I believe it is highly profitable.” Such “sentiment analysis,” as computer-driven reading of the social media mood is known, is used as a tool in traditional markets like equities and foreign exchange to trade on consumer feelings toward a company or asset. But it could be of greater significance in cryptocurrency markets, where there are few authoritative sources of information, such as central banks, scarcely any reliable data to gauge asset value like economic indicators and financial statements, and a high proportion of individual investors. It is also early days for the technique in the crypto sector, with scant industry-wide data on performance and many questions over its effectiveness. None of the institutions Reuters spoke to would give details of the performance of their algorithms, citing commercial confidentiality. ONLINE CACOPHANY To be sure, digital currencies do share some drivers with traditional markets such as comments by policymakers. Bitcoin can be sensitive to remarks by regulators in particular: It fell sharply last week after the U.S. Federal Reserve chief called for a halt to Facebook’s planned Libra cryptocurrency project. But given cryptocurrencies have been entwined with the internet from their dawn a decade ago, when the word was spread in forums and chatrooms, it would seem to make sense to search for price triggers online. Still, it’s far from cheap or simple to design an algorithm that can find market-moving signals in the cacophonous world of social media, analyzing huge numbers of posts in dozens of languages while sifting out unreliable information. Andrea Leccese, president of Bluesky Capital, an investment firm in New York, said upfront costs for a robot capable of only reading Twitter in English were between $500,000 to $1 million, with most of the money spent on skilled developers. That has deterred Bluesky from using the technique, he said. One daunting challenge is the sheer number of social media channels. Beyond Twitter, sites often used by cryptocurrency aficionados include Telegram, a messaging app with public channels and Reddit, a messaging board. In Asia, home to many retail traders, apps like Line in Japan and Kakao in South Korea are popular. Tens of thousands of comments on cryptocurrencies are pumped out around the clock across both national and international channels. Reddit’s main forum, or subreddit, for bitcoin alone has 1.1 million members. Twitter also sees tens of thousands of posts mentioning bitcoin every day, with between 14,000 and 32,000 daily for the last three months, according to the BitInfoCharts website. In an attempt to extract meaning from this mayhem, algorithms use so-called natural language processing - identifying key words and emotions that indicate changes in how social media users view certain digital currencies. ADVERTISEMENT Investors using algorithms say they can also identify patterns for information that gains traction online. ”The information propagates not randomly, but through a very well-defined structure - it’s like a tree,” said Elwood’s Ren, which has used sentiment analysis for nearly two years after developing its own software. “It’s very similar to modeling the spreading of a virus.” FAKE NEWS FEARS Other investors emphasized the challenges in teaching machines to spot biased or inaccurate information. A Reuters report (here) last November found that many social media users take money for positive reviews of digital coins. BitSpread, a cryptocurrency asset manager based in London and Singapore, uses its own capital to trade using an algorithm it started developing about a year ago, its CEO Cedric Jeanson told Reuters. It is a relatively narrowly targeted software. Aggregating Twitter feeds, it looks out for posts on the liquidation, or closing, of positions at exchanges. “It’s a matter of gathering all the info, trying to understand who is trading where, what kind of liquidation can appear,” he said. “It’s a strategy that makes sense.” However, he acknowledged the drawbacks. “The sentiment itself, what we see on Twitter, can be really geared toward fake news. We are always very cautious about what we’re reading in the news because, most of the time, we’ve seen that there’s a bias.” Many algorithms use machine learning, where they are supposed to improve through experience and better understand how social media posts translate into market movements. Slideshow (3 Images) Developers often identify key people with outsized voices and large numbers of followers to weight more heavily in their algorithm, said Bijan Farsijani of Augmento, a Berlin-based startup that launched an algo for sentiment analysis last month. He said a number of hedge funds had bought the software from his company since the launch. CODERS IN DEMAND Bitcoin, the biggest cryptocurrency and a bellwether for the sector, has surged over 180% this year, driving up the interest of bigger investors from trading firms to hedge funds. Bitcoin’s most recent rally, last month, was seen by analysts as driven by expectations for a wider adoption of cryptocurrencies driven by Facebook’s Libra. That move was mirrored by a surge in interest online. Google searches for cryptocurrencies hit their highest level in three months on June 18, when Facebook made the announcement. It is, however, difficult to pinpoint the chicken and the egg: online chatter or price moves. “There may be some value in sentiment analysis in crypto, but most of the time what people tweet may be a lagging indicator of the price move,” said Leccese of Bluesky Capital. “But there is potential,” he added. “People will start looking at this more in the next five to 10 years because there will be diminishing returns because of increased competition in traditional strategies.” While there is a lack of data specifically for this technique, “quantitative” cryptocurrency funds - which use methods from arbitrage to sentiment analysis - significantly outperformed funds that make longer-term bets in the first quarter of this year, a PwC report shows. Coders say they are in increasing demand. Taiwan-based Marc Howard teamed up with over 500 machine learning experts to crowdsource sentiment analysis algorithms, bringing in data from sources including Google Trends, Reddit and development platform GitHub. Howard said his bitcoin investments using an algorithm beat funds simply tracking the price of the cryptocurrency by 54% in the year to June 24, adding that funds in New York and Taipei had tapped him for help in developing their own analysis. “It’s pretty hot right now,” he said. “Any fund that’s worth their salt, they are devoting some of their resources and allocation for sentiment analysis.” Reporting by Tom Wilson and Simon Jessop; Editing by Pravin Char Our Standards:The Thomson Reuters Trust Principles. a href="" target="_blank" title="럭키카지노먹튀">럭키카지노먹튀 a href="" target="_blank" title="체리게임사이트">체리게임사이트 a href="" target="_blank" title="카지노온카">카지노온카 a href="" target="_blank" title="카지노게임">카지노게임 a href="" target="_blank" title="바카라사이트">바카라사이트 a href="" target="_blank" title="벳삼주소">벳삼주소 a href="" target="_blank" title="벳365주소">벳365주소 a href="" target="_blank" title="메이저토토사이트">메이저토토사이트 a href="" target="_blank" title="인터넷카지노">인터넷카지노 a href="" target="_blank" title="카지노추천">카지노추천 a href="" target="_blank" title="성인놀이터">성인놀이터 a href="" target="_blank" title="헬로우카지노">헬로우카지노 a href="" target="_blank" title="우리카지노">우리카지노 a href="" target="_blank" title="삼삼카지노추천">삼삼카지노추천 a href="" target="_blank" title="월드카지노추천">월드카지노추천 a href="" target="_blank" title="33카지노룰렛">33카지노룰렛 a href="" target="_blank" title="에비앙카지노주소">에비앙카지노주소 a href="" target="_blank" title="삼삼카지노추천">카지노사이트추천 a href="" target="_blank" title="vip카지노">vip카지노 a href="" target="_blank" title="세븐카지노">세븐카지노 a href="" target="_blank" title="바카라하는방법">바카라하는방법 a href="" target="_blank" title="마카오카지노">마카오카지노 a href="" target="_blank" title="국민카지노">국민카지노 a href="" target="_blank" title="토토포탈">토토포탈 a href="" target="_blank" title="마라톤배팅">마라톤배팅 a href="" target="_blank" title="로얄드림카지노">로얄드림카지노 a href="" target="_blank" title="카지노로얄">카지노로얄 a href="" target="_blank" title="첫충10%">첫충10% a href="" target="_blank" title="블루카지노">블루카지노 a href="" target="_blank" title="황금의제국">황금의제국 a href="" target="_blank" title="국내카지노">국내카지노 a href="" target="_blank" title="스타바카라">스타바카라 a href="" target="_blank" title="정글카지노">정글카지노 a href="" target="_blank" title="홀덤사이트">홀덤사이트 a href="" target="_blank" title="식보사이트">식보사이트 a href="" target="_blank" title="사다리패턴">사다리패턴 a href="" target="_blank" title="카지노룰">카지노룰 a href="" target="_blank" title="플레이볼24">플레이볼24 a href="" target="_blank" title="공항카지노">공항카지노 a href="" target="_blank" title="토토승무패">토토승무패 a href="" target="_blank" title="토토잘하는법">토토잘하는법 a href="" target="_blank" title="축구승무패">축구승무패 a href="" target="_blank" title="국내경기토토">국내경기토토 a href="" target="_blank" title="토토정보사이트">토토정보사이트 a href="" target="_blank" title="네임드사다리노하우">네임드사다리노하우 a href="" target="_blank" title="포커">포커 a href="" target="_blank" title="매직미러초이스">매직미러초이스 a href="" target="_blank" title="토토스페셜경기">토토스페셜경기 a href="" target="_blank" title="파라다이스카지노">파라다이스카지노 a href="" target="_blank" title="생중계바카라">생중계바카라 a href="" target="_blank" title="안전놀이터주소">안전놀이터주소 a href="" target="_blank" title="먹튀톡톡">먹튀톡톡 a href="" target="_blank" title="토토안전놀이터">토토안전놀이터 a href="" target="_blank" title="바카라동호회">바카라동호회 a href="" target="_blank" title="mgm사이트">mgm사이트 a href="" target="_blank" title="소셜그래프추천">소셜그래프추천 a href="" target="_blank" title="스포츠토토배당율">스포츠토토배당율 a href="" target="_blank" title="드래곤타이거사이트">드래곤타이거사이트 a href="" target="_blank" title="f1카지노">f1카지노 a href="" target="_blank" title="예스카지노">예스카지노 a href="" target="_blank" title="우리코리아카지노">우리코리아카지노 a href="" target="_blank" title="슈퍼카지노파트너">슈퍼카지노파트너 a href="" target="_blank" title="33카지노먹튀">33카지노먹튀 a href="" target="_blank" title="에비앙카지노파트너">에비앙카지노파트너 a href="" target="_blank" title="트럼프카지노총판">트럼프카지노총판 a href="" target="_blank" title="슬롯게임">슬롯게임 a href="" target="_blank" title="카지노그림장">카지노그림장 a href="" target="_blank" title="사설토토사이트추천">사설토토사이트추천 a href="" target="_blank" title="블랙잭룰">블랙잭룰 a href="" target="_blank" title="바카라잘하는방법">바카라잘하는방법 a href="" target="_blank" title="슈퍼카지노양방">슈퍼카지노양방 a href="" target="_blank" title="예스카지노가입쿠폰">예스카지노가입쿠폰 a href="" target="_blank" title="F1카지노먹튀">F1카지노먹튀 a href="" target="_blank" title="삼삼카지노주소">삼삼카지노주소 a href="" target="_blank" title="온라인카지노">온라인카지노 a href="" target="_blank" title="트럼프카지노모바일">트럼프카지노모바일 a href="" target="_blank" title="에비앙바카라">에비앙바카라 a href="" target="_blank" title="yes카지노">yes카지노 a href="" target="_blank" title="바카라사이트주소">바카라사이트주소