Anomaly detection is generally used to automatically detect out-of-distribution behaviours in asset prices. On an hourly basis, approx. 5 minutes past each hour (UTC), a new anomaly score (0-100%) is generated by deep learning AI models for each of the 12 supported crypto assets, (AAVE, ADA, BNB, BTC, DOT, ETH, LTC, MATIC, SOL, UNI, XMR, XRP). The deep learning AI models look at a combination of market data, context data and on-chain data to detect irregular patterns. These may be the result of undisclosed new information, ripple effects from correlated assets, or structural breaks in an asset’s behaviour versus the broader market. This technology can promptly discover these hidden market data aberrations, which would be otherwise undetectable, and provide an early warning on potential volatility events, making it a powerful risk management tool.
Thanks to the embedded collaboration with Axyon AI, a leading European FinTech with expertise in Deep Learning AI for asset management and trading firms, DeFinity Markets has been providing its customers and token holders access to premium crypto market anomaly detection scores since September 2021. The technology has proven extremely valid to monitor crypto market data and generate early warnings regarding (i) unexpected price behaviours, (ii) anomalous liquidity changes, and (iii) inconsistent transactions that could be a sign of broader volatility events on price.
Manu Choudhary, co-founder of DeFinity, says: “From a risk management and trading perspective the new hourly Anomaly Detector has the potential to play a pivotal role in giving portfolio managers early warning of the presence and scale of volatility events or directional changes in the 12 target crypto assets. Allowing them to either reduce their risk positions, engage in portfolio hedging or fade into volatility / directional changes to generate alpha in the spot or options market.”
Michael Siwek, DeFinity co-founder, added: “The anomaly detector could give digital asset stakeholders forewarning of a network attack, regulatory intervention or watching a country bail out of assets and predicting crisis.”
“The anomaly detector could give digital asset stakeholders forewarning of a network attack, regulatory intervention or watching a country bail out of assets and predicting crisis.”Michael Siwek, DeFinity co-founder
“We were the first to create and launch AI powered crypto anomaly detection in 2021 and in less than 12 months we have managed to exponentially improve the accuracy, reliability and shorted the predictive window to 60 minutes creating a truly remarkable and ground-breaking technology,”, concluded Chris Park CFO at DeFinity Markets.