How to Use ChatGPT to Make Money From Crypto
One of the most challenging aspects of crypto trading and investing is simply keeping up with the market. Cryptocurrency prices move 24/7, and the news never stops.
That’s where artificial intelligence (AI) systems, and specifically ChatGPT, can help. ChatGPT has the power to quickly summarize data and help you spot the best opportunities in the market. Thousands of crypto traders are already using ChatGPT to improve their strategies and find more profits.
In this guide, we’ll cover everything you need to know about how to use ChatGPT to make money from crypto. Keep reading to find prompt ideas, top use cases, practical tips, and more.
- In This Article
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- Step 1: Use Prompts to Analyze News Headlines
- Step 2: Ask ChatGPT to Explain Complex Crypto Concepts in Plain Language
- Step 3: Use ChatGPT to Create Custom Trading Strategies
- Step 4: Get Help Writing Python Scripts for Trading Bots
- Step 5: Test Strategies on Paper Trading Platforms Before Using Real Money
- Examples of ChatGPT Prompts for Crypto Trading
- In This Article
- Show Full Guide
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- Step 1: Use Prompts to Analyze News Headlines
- Step 2: Ask ChatGPT to Explain Complex Crypto Concepts in Plain Language
- Step 3: Use ChatGPT to Create Custom Trading Strategies
- Step 4: Get Help Writing Python Scripts for Trading Bots
- Step 5: Test Strategies on Paper Trading Platforms Before Using Real Money
- Examples of ChatGPT Prompts for Crypto Trading
Key Takeaways
- ChatGPT is an AI chatbot. It’s not the best choice for directly trading crypto, but it can be used for research and to help develop trading strategies.
- You can also use ChatGPT’s coding abilities to help you develop scripts for algorithmic trading bots.
- Advanced uses of ChatGPT for crypto trading include automating technical analysis, getting help diversifying your portfolio, writing code for backtesting strategies, and analyzing market sentiment.
- When using ChatGPT, remember to double-check the chatbot’s work. Treat it as an assistant and always try out ChatGPT strategies in a paper trading environment first.
What Is ChatGPT and Why Does It Matter for Crypto?
ChatGPT is a generative AI chatbot developed by OpenAI. It’s a general-purpose chatbot trained on the entire internet, capable of answering questions about a wide range of topics, from cryptocurrency to geography to construction.
ChatGPT matters for crypto because it’s really good at gathering, analyzing, and summarizing data. So, you can use it to answer questions about the crypto market as a whole or specific cryptocurrencies. It’s also very powerful for coding, making it an ideal assistant for writing scripts for backtesting and algorithmic trading bots.
In essence, ChatGPT is like a smart trading assistant with expertise in many different aspects of crypto trading. Who wouldn’t love an assistant to take some of the work out of trading crypto?
That said, keep in mind that ChatGPT is a chatbot only, not an AI agent or an AI trading bot. It can’t execute specific tasks for you. For example, you can ask it to help you write code within your chat session, but you can’t have ChatGPT run that code in a third-party API. You’ll need to do that part yourself.
Can ChatGPT Trade Crypto Directly? (Clearing Misconceptions)
ChatGPT cannot trade cryptocurrencies directly. It’s a chatbot only, and it doesn’t have a built-in crypto wallet or crypto exchange.
You could integrate ChatGPT with a crypto exchange or another trading platform using custom code. However, there’s no need to do this since there are already AI-powered crypto trading bots that have chat interfaces like ChatGPT and that are specifically built for crypto trading.
With these bots, you can provide access to your wallet, discuss your trading strategy with the chatbot, and then let the AI trade for you.
You can also utilize AI agents to trade crypto on your behalf. There are even some decentralized AI agent crypto projects, like Virtuals Protocol, that will help you build a custom AI agent to trade around your strategy.
Let’s clear up some myths about ChatGPT and crypto trading:
| Myth | Reality |
|---|---|
| ❌ ChatGPT can trade crypto directly. | ✅ ChatGPT can’t place trades for you. However, you can use an AI crypto trading bot or an AI agent to trade directly. |
| ❌ ChatGPT is better than human traders. | ✅ ChatGPT is a powerful assistant, but it’s not always right. Human judgement is required before using strategies or ideas gained from ChatGPT. |
| ❌ ChatGPT is anti-crypto. | ✅ ChatGPT has a slight pro-crypto bias. Keep this in mind when building a diversified portfolio that includes crypto and other assets like stocks. |
| ❌ ChatGPT can spot crypto scams. | ✅ ChatGPT may be susceptible to crypto scams. Always do your own research before buying a new or thinly traded token. |
| ❌ ChatGPT is always up to date. | ✅ ChatGPT doesn’t always have access to real-time news and price data. Be cautious asking the chatbot about breaking news or price action. |
Is ChatGPT Good for Crypto Research and Trading?
ChatGPT can be a powerful tool for crypto trading and investing, but it does have important limitations to be aware of. Here’s a breakdown of the pros and cons of using ChatGPT for trading crypto.
Pros:
- Can rapidly summarize data from news, social media, and charts
- Generates crypto day trading strategies and backtests them
- Assists with technical analysis
- Identifies trending cryptocurrencies and potential trading opportunities
- Assists with risk management and position sizing
Cons:
- Doesn’t have access to real-time data (unless connected to third-party platforms via APIs)
- Can produce hallucinations and provide false information
- Doesn’t actually have trading experience and is not a substitute for financial advice
How to Use ChatGPT for Crypto Trading (Step-by-Step Guide)
There are many different ways to use ChatGPT for crypto trading, and the specific prompts that work for you will depend on your goals. To help you get started, we’ll walk you through an example of how to use ChatGPT to trade crypto.
Step 1: Use Prompts to Analyze News Headlines
A good place to start your trading research is to get a sense of what’s going on in the crypto market right now. You can ask ChatGPT to pull up the biggest crypto news of the day and quickly summarize it for you. Here’s an example prompt:
I am a crypto trader interested in finding opportunities in the crypto market. Please identify the five most important pieces of news in the crypto market in the past 24 hours. Give me one headline from each piece of news, and summarize the news story in 3 sentences or less.
Step 2: Ask ChatGPT to Explain Complex Crypto Concepts in Plain Language
Next, you can use ChatGPT to break down complex crypto topics in ways that are easy to understand. This is important to understanding the fine details of specific projects and what sets them apart.
For example, you can use this prompt with ChatGPT:
Please explain the concept of a blockchain oracle in plain language. Pretend I am a fifth-grader and keep the explanation as simple as possible.
Step 3: Use ChatGPT to Create Custom Trading Strategies
You can also ask ChatGPT to create custom trading strategies. It’s especially good at developing trend-following, scalping, or swing trading strategies.
Here’s an example of how to prompt ChatGPT to develop a scalping strategy:
You are a professional crypto trader who specializes in scalping. You need to develop a scalping strategy for Bitcoin that is based on technical analysis. The strategy should involve no more than five technical indicators and must be limited to opportunities with a risk-reward ratio of less than 0.5. The strategy should provide detailed guidance for when to enter and exit each trade.
Step 4: Get Help Writing Python Scripts for Trading Bots
If you’re using a crypto trading bot, it may require you to code in Python to customize the bot’s parameters. With ChatGPT, you don’t have to be an expert programmer to write these scripts.
Here’s how you can ask ChatGPT for help writing a Python script for your trading bot.
I am using a crypto trading bot written in Python. I need help writing a Python script to tell the bot when to enter and exit trades. The trading strategy I want to use enters trades when a token is [your entry strategy]. It exits trades when a token is [your exit strategy]. The bot should only trade Bitcoin (BTC), Ethereum (ETH), and Solana (SOL). Please create a Python script for this strategy.
Step 5: Test Strategies on Paper Trading Platforms Before Using Real Money
Whenever you use ChatGPT for crypto analysis or trading, it’s important to carefully check the chatbot’s work.
If you use it to create a custom trading strategy, test out that strategy in a paper trading platform before using it for real money trading. If you ask ChatGPT to write a trading bot script, test out the script in demo mode before using it for live trading.
If there are issues with the results that ChatGPT produced, you can go back to the chatbot with the strategy or script and ask it to make adjustments. For example:
I have a Python script for a crypto trading bot that you helped me create. It’s pretty good, but I’d like to adjust the parameters for when the bot enters a trade. Instead of [X], the bot should enter a trade when [X]. Please revise the Python script to reflect this change.
Examples of ChatGPT Prompts for Crypto Trading
Here are a few more examples of prompts you can use with ChatGPT to get the most out of the chatbot.
- Summarize the impact of Bitcoin ETF approval on price action.
- Explain how changing interest rates are expected to influence crypto prices.
- Generate a list of AI agent tokens that are trending on social media
- Create a strategy for managing trading risk if volatility in Bitcoin increases above its historical average.
Can ChatGPT Predict Crypto Prices?
ChatGPT cannot make crypto price predictions directly. It doesn’t have access to real-time price data or technical charts (at least, not without third-party integrations) needed to make accurate predictions.
However, ChatGPT can analyze historical price trends and news sentiment to give you a sense of where a cryptocurrency might be headed. For example, you can use it to ask if the sentiment around a specific token is bullish or bearish, which you can then combine with technical analysis to form your own price prediction.
You can also use ChatGPT for scenario planning. For example, you can ask ChatGPT:
- What are the possible outcomes if Ethereum gas fees rise?
- What could happen to the price of Bitcoin if crypto legislation passes in the US?
- What conditions could lead to a crypto bull run?
These kinds of hypotheticals enable you to get more information about where the market might be headed next or what conditions to watch out for.
Note that there are some ready-made ChatGPT integrations that can be used for crypto price predictions. These should be used with extreme caution, as ChatGPT isn’t a real financial analyst and is simply basing its responses on historical patterns.
Always take AI-generated price predictions with a grain of salt and use them as a single data point in a much larger analysis.
What Is the Best AI Tool for Crypto Trading?
ChatGPT is a powerful tool for crypto research, but it’s far from the only AI-powered crypto platform making traders’ lives easier.
An alternative type of crypto trading tool to consider is a crypto trading bot. Unlike ChatGPT, trading bots such as 3Commas, Pionex, and Cryptohopper have access to real-time crypto data feeds and exchange integrations. You can give them access to tokens from your wallet and have them execute trades on your behalf following a specific strategy.
Trading bots like these are appropriate if you want to put your trading directly in the hands of a bot. The benefit is that once you develop a profitable strategy, you can turn over the legwork of executing trades to the trading bot. ChatGPT can’t do this, but you can use ChatGPT to help you develop a strategy to feed the bot or even create Python scripts to customize your trading bot.
Another type of tool you can use is an AI analytics platform, like Token Metrics or Santiment. These platforms incorporate AI models to analyze huge amounts of data, such as social media sentiment. They’re more specialized than ChatGPT, so they’re generally more reliable at giving you trustworthy data insights.
That said, these AI analytics platforms are very purpose-built and not general-use at all like ChatGPT. So, it can be helpful to use Token Metrics or Santiment alongside ChatGPT to help you monitor the news that is driving sentiment or to incorporate crypto sentiment changes into a larger trading strategy.
Advanced Use Cases of ChatGPT for Crypto
There are also some more advanced ways to use ChatGPT for crypto trading. These approaches can help you find more opportunities or gain a small edge in the market. Just remember to use these approaches with caution, as they all require some degree of human oversight.
Automating Technical Analysis Explanations
You can use ChatGPT to conduct rapid technical analysis using the best indicators for crypto trading. These include support and resistance lines, moving averages, relative strength index (RSI), and moving average convergence-divergence (MACD).
To do this, you need to copy and paste a technical chart into your conversation with ChatGPT. The chart should be overlaid with the indicators you want to analyze. Then tell ChatGPT:
Here is a technical chart of [X] token over the past [timeframe] with [indicators] applied. Please conduct a technical analysis and identify any areas of support and resistance or trendlines that are relevant for trading.
You can then build on ChatGPT’s technical analysis by asking it to come up with potential trades.
Based on this technical analysis, identify several possible setups to trade. For each trade, please state the entry price, target price, and stop-loss level. Also identify any technical triggers and calculate the trade’s risk-reward ratio. Explain why each setup is good.
Carefully analyze these recommended trades using your own technical analysis before trading them.
Portfolio Diversification
You can also use ChatGPT to help diversify your portfolio. You can do this for diversification across different crypto tokens or across multiple asset classes, such as stocks and bonds.
Ask ChatGPT:
I am a crypto investor looking to diversify my portfolio. I currently own [X] tokens and have [X] available in cash to invest. I want to reduce my risk to market volatility while taking advantage of falling interest rates. What tokens do you suggest holding and with what capital allocation? Please explain your reasoning for each token.
This prompt can help you generate a list of ideas to invest in. ChatGPT may not always get the allocations perfectly right, so think about what makes sense for your portfolio before following the recommendations.
Writing Code for Backtesting Strategies
Another powerful use of ChatGPT is to write a script to backtest a trading strategy. Backtesting involves simulating your strategy on months or years’ worth of historical price data to see how it would have performed over your chosen timeframe.
For this to work, you’ll need a trading strategy and a trading platform that supports backtesting scripts, such as TradingView. Start by describing your strategy to ChatGPT, then ask it to help you write a script to backtest that strategy for your chosen trading platform. Be sure to include the timeframe for your backtest and specific entry and exit conditions in your request.
When running the backtest, it’s important to look closely at the trades to make sure they match your strategy. If the backtest that ChatGPT produces doesn’t match your strategy perfectly, go back to the chatbot to make refinements.
Market Sentiment Analysis
You can also use ChatGPT to assess sentiment around specific tokens on social media platforms like Reddit, X, and Telegram. Use a prompt similar to the following:
I want to conduct a sentiment analysis of the Solana crypto token, SOL. Find all mentions of “Solana” or “SOL” on Reddit from the past 24 hours and create a chart that breaks down whether the mentions are positive, negative, or neutral. Please also list the five most positive and five most negative mentions.
This analysis won’t be as detailed as what you might get from a dedicated crypto sentiment analysis platform like Santiment, but it can be a great starting point if you’re investigating what other traders think about a new or fast-moving token.
Risks, Limitations, and Ethical Considerations
ChatGPT is a great tool for crypto traders, but it does come with some risks and limitations that you need to be aware of.
- Over-reliance: Overly relying on ChatGPT for research can lead to blind spots or a lack of caution in trusting the chatbot’s results. This can potentially result in large losses.
- Ethical issues: ChatGPT can sometimes suggest tactics that resemble a pump-and-dump scheme or market manipulation. These techniques are not legal and should be avoided.
- Mistakes and hallucinations: ChatGPT isn’t always right, and sometimes it makes up information entirely while sounding highly confident. Always double-check the chatbot’s work and never jump straight into trading strategies or tokens it recommends.
In general, it’s important to treat ChatGPT as a helpful assistant who sometimes gets things wrong. It’s not a financial advisor and has no real “experience” with trading crypto. Always do your own research and test out ChatGPT-generated strategies in a safe paper trading environment first.
The Future of ChatGPT in Crypto Trading
ChatGPT has a lot of potential uses in crypto trading, and it’s only likely to become a more important tool from here. Upgrades to the chatbot, including access to real-time data and integrations with trading platform APIs, are likely to make it ubiquitous in crypto trading. These improvements will also improve ChatGPT’s ability to suggest strategies, analyze technical patterns, and spot opportunities as they happen.
Furthermore, ChatGPT is likely to be the basis for a growing number of AI agents, which have a vast number of potential applications on blockchains. For example, AI agents are expected to transform decentralized finance (DeFi) by creating their own trading strategies and running with minimal human intervention.
Perhaps most importantly, ChatGPT and AI tools more generally could make crypto trading more accessible to the masses. Trading will no longer require hard-to-acquire knowledge or specialized tools. Anyone can participate with the help of AI, making trading more democratic.
Final Thoughts on Using ChatGPT to Make Money From Crypto
ChatGPT is an incredibly powerful tool for making money from the crypto market. While it can’t trade crypto directly or make price predictions for you, it can do a whole lot of other things—including developing trading strategies, conducting technical analysis, analyzing social media sentiment, and summarizing breaking market news.
Just remember to use ChatGPT carefully. It’s a tool, not a crystal ball. The best way to get started is simply to begin crafting prompts and playing with the chatbot to see how it can have the biggest impact on your crypto trading.
FAQs
Does ChatGPT have its own crypto coin?
Can I connect ChatGPT to crypto trading platforms using APIs?
Can ChatGPT help identify potential rug pulls or scams?
How do professional traders use ChatGPT?
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