Results: Using a cryptocurrency trading algorithm that buys based on Reddit sentiment

It’s been a week since I have left the Reddit crypto trading bot loose on the Internet, in order to make trades based on what different subreddits are talking about in terms of cryptocurrency. 

After many deliberations with myself that this might not exactly be the smartest strategy out there, I decided to listen to my less rational part, bite the  bullet and let the bot trade cryptocurrencies based on the reddit sentiment using live funds.

The trading algorithm has been live trading for the past 6 days, and gathered some pretty interesting results. By interesting I mean it blew my expectations out of the water! I was bracing for a loss, and was hoping to break even. I came looking for copper, but found gold. It turned a profit. How the hell did it turn a profit? Is Reddit wisdom a viable indicator?

Let’s look at the buy logic that I implemented into the bot, to understand what happened, and why we got the results we did:

  • The bot scans the top 10 posts in hot on /r/cryptocurrency, /r/crypto_currency, /r/cryptocurrencies and /r/worldnews. 
  • It looks for keywords in the posts title and description, containing any of the top 40 coins by marketcap
  • It then analyses the sentiment of all posts that mention any of the top 40 cryptos
  • If the compound sentiment is positive, the algo will buy that coin.

I avoided scanning the comments as that would surely backfire, as some of the posts below are showing when I shared the idea on Reddit:

And only scanning for the top 40 coins by marketcap ensures that no one just shills outright scams.

With that logic in mind, here is last week’s performance broken down – all generated by the Reddit hivemind.

I am now hodling 11 coins in my portfolio, all because they were talked about positively at the time on Reddit: BTC, ETH, ALGO, XLM, ADA, SOL, LINK, DOGE, MATIC, XTZ, LTC.

Below I used matplotlib below to plot the daily gains/losses for all the coins:

Don’t want to jump any any conclusions just yet, but damn, this looks a lot better than I expected. I was fully prepared to incur some serious loss, but that’s not the case it seems. I trust the Reddit hivemind, for now, anyway. Yes there’s DOGE and LTC in there, but that can be avoided in the future by specifically excluding certain coins from being picked up.

It’s going to be easier to visualise the overall performance using a scatter plot, like the one below:

You can see here, that on the last day, we only have 1 coin in minus, all the rest are above 0.

Or better yet let’s just look at the raw data.

BTC: +3.8% | ETH: 6.5% | ALGO: -0.2% | XLM: -2% | ADA: +8.8% | SOL: +1.77% | LINK: +4.8% | DOGE: +1.5% | MATIC: +8.6% | XTZ: +5.3% | LTC: 6.1%

All that brings our Reddit crypto trading bot to an overall profit of 4.1% this week, which again – considering that me, as well as the Reddit community had multiple concerns that this strategy might actually work, I am well surprised.

I will let the bot run for another week, and then crunch the numbers once again.

If you’re feeling brave, give it a shot yourself there is a link to the public GitHub repo in there as well as a guide on how to run and customise the bot.

 

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