Making sense of chaos? ‘Algos’ scour social media for clues to crypto moves

Making sense of chaos? ‘Algos’ scour social media for clues to crypto moves
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Algorithms use so-called natural language processing — identifying key words and emotions that indicate changes in how social media users view certain digital currencies. (Reuters)
Making sense of chaos? ‘Algos’ scour social media for clues to crypto moves
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Bin Ren, CEO of Elwood Asset Management
Updated 17 July 2019

Making sense of chaos? ‘Algos’ scour social media for clues to crypto moves

Making sense of chaos? ‘Algos’ scour social media for clues to crypto moves
  • Hedge funds and asset managers develop code to scrape social media sites for market-changing news

LONDON: 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.

The 20 percent 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 specialises 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 such as equities and foreign exchange to trade on consumer feelings towards 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 such as 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.

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 US 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 is far from cheap or simple to design an algorithm that can find market-moving signals in the cacophonous world of social media, analysing 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 such as 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.

Investors using algorithms say that 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 modelling the spreading of a virus.”

Other investors emphasised the challenges in teaching machines to spot biased or inaccurate information.

A Reuters report 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 towards 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.

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.

Background: Bitcoin’s wild ride

Bitcoin, the biggest cryptocurrency and a bellwether for the sector, has surged more than 180 percent 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 that they are in increasing demand.

Taiwan-based Marc Howard teamed up with more than 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 percent 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.”


Saudi Arabia to auction mining licenses in 2022

Saudi Arabia to auction mining licenses in 2022
Updated 18 June 2021

Saudi Arabia to auction mining licenses in 2022

Saudi Arabia to auction mining licenses in 2022

RIYADH: Saudi Arabia plans to auction two major mining licenses in 2022 for commodities including gold, copper and zinc, as the Kingdom aims to triple the mining
sector’s contribution to the national gross domestic product (GDP) to SR240 billion ($64 billion) and double the number of jobs to 470,000 by 2030.
The auction was announced by Vice Minister for Saudi Mining Affairs Khalid Al-Mudaifer during an interview with S&P Global on the sidelines of the Gulf Petrochemicals and Chemicals Association (GPCA) Leaders Forum in Dubai this week.
Looking ahead, Al-Mudaifer said: “We expect to see an increase in international investment in mining, particularly because demand for minerals around the world is growing fast.
According to geological surveys dating back 80 years, the Kingdom has an estimated reserve of untapped mining potential valued at $1.3 trillion.” Saudi Arabia’s mining industry has already attracted some major foreign investors. American industrial corporation Alcoa has a 25.1 percent stake in two companies, Ma’aden Bauxite and Alumina and Ma’aden Aluminum, as part of $10.8 billion joint venture with the Saudi Arabian Mining Company (Ma’aden) located in Ras al-Khair Industrial City in the Eastern Province.
The Mosaic Company, a fertilizer producer, has a 25 percent stake in the $8 billion Ma’aden Wa’ad Al-Shamal Fertilizer Production Complex located in Wa’ad Al Shamal Minerals Industrial City in the north of Saudi Arabia. Furthermore, Barrick Gold has a 50 percent stake with Ma’aden in the Jabal Sayid underground Copper Mine and Plant.
Al-Mudaifer said that a new mining law, which came into force on Jan. 1, 2021, will help attract more foreign investors because it treats them equally with local investors.
“We have already received a number of applications for exploration licenses from locals and are also in conversations with a number of international mining businesses,” he said.
Speaking at the GPCA forum, Al-Mudaifer described how the Kingdom’s mining sector remained resilient throughout the pandemic.
“The government’s robust response to controlling the pandemic, paired with our thoughtful approach to executing the country’s mining strategy, has enabled us to continue moving forward with our industry transformation,” said Al-Mudaifer.
He also highlighted the launch of the National Geological Database, which provides online access to 80 years of national records of geological, geophysical and geochemical information, and the introduction of a new web-based platform called Ta’adin, which will be the single point of access for mining license applications, issuance and information.
Saudi Arabia plans to launch a comprehensive geological survey to map the country’s mining potential. “The mining sector recently invested $500,000 to launch our Regional Geological Survey Program, designed to collect the essential data required for mineral exploration in the Kingdom,” Al-Mudaifer told S&P Global.
“The five-year program will conduct geophysical and geo-chemical surveys and create detailed mapping of more than 700,000 square kilometers of the mineral-rich Arabian Shield area in Saudi Arabia,” he said.
The Vision 2030 reform plan identified the mining sector as a potential third pillar of the Kingdom’s industrial growth, alongside petroleum and petrochemicals. The country is investing SR14 billion to develop the sector.
“We have emerged more confident than ever that mining in the Kingdom is on the fast track to becoming the third pillar of Saudi industry.” the vice minister said.
About $45 billion in private and public sector investments have gone into the mining sector over the past decade, mainly in phosphate and aluminum production.
“Saudi Arabia has some of the world’s largest reserves of phosphate, and so we are investing in major phosphate projects such as Ma’aden’s large-scale phosphate complex, Phosphate 3,” Al-Mudaifer said.
The $6.4 billion Phosphate 3 expansion will make Ma’aden one of the top three global phosphate fertilizer producers and Saudi Arabia the second largest phosphate fertilizer exporter worldwide.


Egypt to start electric car production from mid-2022

Egypt to start electric car production from mid-2022
Updated 18 June 2021

Egypt to start electric car production from mid-2022

Egypt to start electric car production from mid-2022
  • Thirteen electric vehicles will be tested on Egyptian streets from next month

CAIRO: Egypt will begin testing electric cars on the country’s streets from July, ahead of plans to launch full-scale production of the vehicles from mid-2022.

Thirteen imported electric vehicles will be tested on Egyptian streets from next month, Hisham Tawfik, minister of the Egyptian public enterprise sector, said while attending the launch of the Nasr E70 electric car.

Nine of the electric cars will be tested by drivers nominated by Uber, the global ride-hailing company, he added.

The Nasr E70 is scheduled to start production in mid-2022 with the El Nasr Automotive Manufacturing Company, an affiliate of the Ministry of Public Enterprise Sector’s Metallurgical Industries Company.

Tawfik said that the ministry began studying the electric car production project in mid-2019 as part of efforts to reform and develop its affiliated companies, including the revival of El Nasr Automotive Company.

FASTFACT

E70

The Nasr E70 is scheduled to start production in mid-2022 with the El Nasr Automotive Manufacturing Company.

The project is in line with the global move toward electric cars and aligns with President Abdel Fattah El-Sisi’s directives to localize the manufacture of vehicles used for clean energy.

The Dongfeng Corporation, one of the largest automobile producers in China, is partnering in the production of the Nasr E70 vehicle, the minister said.

An agreement between El-Nasr and Dongfeng was signed in June 2020 following months of negotiations.

The Ministry of Public Enterprise Sector recently released images of the first electric car of its kind in the country.

El Nasr CEO Hani El-Khouly said that three types of electric car models will be available in Egypt, based on battery capacity.

Batteries initially will be made in China, with production later shifting to Egypt.

Trials of the imported cars will continue for up to four months under a range of Egyptian conditions and with different drivers.

The Nasr E70 can reach a speed of 145 kilometers per hour and travel up to 400 km on a single charge.

El-Khouly said that a delegation from China will arrive in Egypt in July to follow up on the tests.

Government subsidy of the car will total about EGP50,000 ($13,333) to support the local market, he said.


From Australia to Hong Kong, internet outages disrupt services

From Australia to Hong Kong, internet outages disrupt services
Updated 18 June 2021

From Australia to Hong Kong, internet outages disrupt services

From Australia to Hong Kong, internet outages disrupt services
  • Many of the outages were reported by people in Australia trying to do banking, book flights and access postal services.
  • Brief internet service outages are not uncommon and are only rarely the result of hacking or other mischief

SYDNEY: A wave of brief Iinternet outages hit the websites and apps of dozens of financial institutions, airlines and other companies across the globe Thursday.

The Hong Kong Stock Exchange said in a post on Twitter Thursday afternoon Hong Kong time that its site was facing technical issues and that it was investigating. It said in another post 17 minutes later that its websites were back to normal.

Internet monitoring websites including ThousandEyes, Downdetector.com and fing.com showed dozens of disruptions, including to US-based airlines.

Many of the outages were reported by people in Australia trying to do banking, book flights and access postal services.

Australia Post, the country’s postal service, said on Twitter that an “external outage” had impacted a number of its services, and that while most services had come back online, they are continuing to monitor and investigate.

Many services were up and running after an hour or so but the affected companies said they were working overtime to prevent further problems.

Banking services were severely disrupted, with Westpac, the Commonwealth, ANZ and St. George all down, along with the website of the Reserve Bank of Australia. Services have mostly been restored.

Virgin Australia said flights were largely operating as scheduled after it restored access to its website and guest contact center.

“Virgin Australia was one of many organizations to experience an outage with the Akamai content delivery system today,” it said. “We are working with them to ensure that necessary measures are taken to prevent these outages from reoccurring.”

Akamai counts some of the world’s biggest companies and banks as customers.

Calls to Akamai, which is headquartered in Cambridge, Massachusetts, but has global services, went unanswered.

The disruptions came just days after many of the world’s top websites went offline briefly due to a problem with software at Fastly, another major web services company. The company blamed the problem on a software bug that was triggered when a customer changed a setting.

Brief internet service outages are not uncommon and are only rarely the result of hacking or other mischief. But the outages have underscored how vital a small number of behind-the-scenes companies have become to running the internet.


Saudi and Russian business officials propose Russian bank in Riyadh

Saudi and Russian business officials propose Russian bank in Riyadh
Updated 18 June 2021

Saudi and Russian business officials propose Russian bank in Riyadh

Saudi and Russian business officials propose Russian bank in Riyadh
  • Russian ambassador to the Kingdom says new commercial attache at the embassy will help Saudi businesses

RIYADH: A proposal to open a Russian bank in Riyadh was presented at a meeting between Saudi and Russian officials on Thursday.
The move would facilitate trade and economic exchange between the two countries, a meeting of the Saudi-Russian Business Council of the Council of Saudi Chambers (CSC) was told.
Russia’s Ambassador to the Kingdom, Sergei Kozlov, said he promised to support and study the proposal to open the bank in Riyadh.
He said a commercial attaché had been appointed at the embassy in Riyadh to help Saudi business owners overcome obstacles.
Ajlan bin Abdulaziz Al-Ajlan, president of the CSC, said the meeting provided strong impetus toward developing more trade and economic relations.
Chairman of the Saudi-Russian Business Council Tariq Al-Kahtani said it was important to strengthen economic and trade cooperation.
The meeting also dealt with some challenges that contributed to the weak volume of trade exchange between the Kingdom and Russia, including the lack of a direct shipping line to facilitate import and export operations.


International companies to invest in Egyptian green hydrogen projects, says minister

International companies to invest in Egyptian green hydrogen projects, says minister
Updated 17 June 2021

International companies to invest in Egyptian green hydrogen projects, says minister

International companies to invest in Egyptian green hydrogen projects, says minister
  • Egypt has signed MOU for 1GW green hydrogen project
  • Other EU companies set to partner with Egypt's private sector

RIYADH: International companies are interested in investing in green hydrogen production in Egypt, according to Minister of Electricity and Renewable Energy Mohamed Shaker.

“There are companies from the European Union that will enter into partnerships with the Egyptian private sector,” he said.

The Egyptian government has signed an MoU with Siemens for the first project to produce green hydrogen with a capacity of 1 megawatt, doubling to 2 megawatts over five years, he said.

“Green hydrogen will be the world’s fuel in the next few years, and I see that Egypt started early in this field,” he added.

Work is currently underway to develop and formulate a strategy for the hydrogen industry in Egypt through a ministerial committee in which the Ministry of Petroleum and Mineral Resources participates as a main member, according to previous statements by the Minister of Petroleum and Mineral Resources Tarek El Molla.

Egypt is planning to invest up to $4 billion in a project to generate green hydrogen gas through water electrolysis, Shaker said this week.

The project is currently in the feasibility studies stage, in consultation with the Sovereign Fund of Egypt and a group of concerned ministries, and will be presented next week, he said.

The United States is planning to increase funding to Egypt to help it convert to solar energy and move away from fossil fuels, US special envoy for climate John Kerry said in Cairo on Wednesday.

Egypt is planning to double the state’s funding for green projects to 30 percent of its overall investment plan during the fiscal year 2021/2022 and to raise it to 50 percent by 2024/2025.