The fundamental consideration for an asset is that its market value and its trading value should be closely interlinked and traders are often looking for assets where there is a variance between these values to take advantage of, driving the two values to the point of equilibrium. This is how the market should work when it is based on the performance of the asset. However, this does not take into consideration a very important element, and that is trader sentiment. This can influence markets substantially.
This means the perceived value of an asset is influenced by beliefs in the asset or its performance (or perhaps a lack of belief), and confidence (or a lack of confidence) in its capacity to perform even when there are not microeconomic indicators to confirm this. This then creates an environment where traders become influenced by the thinking and behaviors of other traders around an asset, which then drives their investment decisions.
So it is possible that sentiment will drive a price lower or higher and this impact on price does not reflect the actual performance of the asset in microeconomic terms. Clearly, the market sentiment is a powerful influence and should not be ignored. In our markets, it affects what people are willing to pay for an asset, which is the fundamental driver of activity in the market. There are assets that will be valued much higher than the numbers indicate they should be. So how do we measure this influence or predict where and when it is occurring?
Sentiment and Sharpe Capital
Finding a way to measure data regarding perceptions of the market and assets is obviously a valuable way to gain a better awareness of how the market will act. Sharpe Capital is looking to bring this thinking into the market place with their new offering and will use the information they collect from their members to assist them in identifying this.
Sharpe is using AI (neural networks) technology to find patterns in market activity. By also using linguistic analysis (covering emotional response and sentiment tied to news, blog and social media content) as well as machine learning (developing and learning from what has happened) a better understanding and capacity for decision making will be developed.
The data that they collect can be sold on to the investment, hedge fund and asset managers for additional revenue, so there should always be an additional guaranteed revenue stream outside of trading.
The Sharpe Platform has been designed to use crowd-sourced sentiment to inform investment decisions and will be going live in December 2017. You can view a version of it now. It includes the Sharpe Capital Markets Protocol, which enables decentralized governance and decision making for members.
The Sharpe SHP Tokens
Currently, Sharpe is selling their SHP crypto tokens which will give you access to the system. In future, the holders of these tokens will be paid monthly in the well-known cryptocurrency Ethereum (ETH) every time their opinions on market information matches market movement.
If you are looking for a new approach to using the Ethereum blockchain and a model that looks to offer an innovative and inclusive approach to your involvement in investment, then the Sharpe Capital offering might appeal. There is more information on their website (https://sharpe.capital/).