By Chloe, ChainCatcher
Is AI reliable for short-term trading? Grok detects market sentiment, ChatGPT finds entry and stop-loss points
AIs like Grok and ChatGPT have become popular tools for traders in short-term trading. This article explains how to use Grok and ChatGPT to instantly detect shifts in market sentiment and translate them into practical trading plans.
The massive price volatility of cryptocurrencies presents endless opportunities for retail investors, but in reality, not everyone can consistently profit. Professional investors, hedge fund managers, and institutional traders draw on extensive market resources to discern the underlying fundamentals and make rational decisions, while most retail investors lag behind market intelligence and blindly follow trends in a panic.
Even though an exchange’s order book clearly lists the open or unfilled orders for a particular trading pair, social media sentiment plays a crucial role in the overall crypto market, even if the data is clear.
According to Cointelegraph, Solana's DeFi activity surged in early June, with TVL climbing to over $9 billion. Traders can use Grok to detect early trend changes and ChatGPT to establish trade setups, including entry plans, stop-loss settings, and profit targets.
How to use Grok to find short-term trading opportunities?
1. Grok tracks the popularity of token discussions on X, capturing hype signals and helping traders identify trends, hot spots, and scams. For example, a sudden increase in mentions of a token on X is likely a sign of a price increase. The free version of Grok allows traders to access 10 messages and three visual analyses within two hours, allowing them to monitor the popularity of one or two tokens daily.
For example, according to the experiment, users can ask Grok "What's the X sentiment on Pi coin?", and Grok will analyze the posts with the highest X popularity.
Grok reports that overall sentiment towards Pi Coin ($PI) is polarized. Bullish (approximately 70% of posts) believe Pi Coin has the potential to break through to $0.50-$0.60, driven by enthusiastic community support and recent technical advancements such as Onramp Money integration and Stellar protocol upgrades. Pi's massive user base of 60 million, AI-driven KYC improvements, and the upcoming rollout of smart contracts are all factors driving bullish sentiment. However, bearish (approximately 20-30%) warn that mainnet delays, insufficient liquidity, centralization concerns, and KYC hurdles could lead to a price drop to $0.25-$0.30, or even lower, especially if unfulfilled promises continue to fuel community discontent.
2. Check technical indicators using Grok, which pulls real-time data (such as RSI) from sources like CoinMarketCap to use for trading (for example, an RSI of 62 for BTC indicates bullish momentum).
For example, according to the experiment, a user could ask Grok: “What’s Bitcoin’s RSI as of September 24, 2025? Please give me a short answer with proper justification.”
Data from Grok indicates that Bitcoin’s 14-period RSI (daily time frame) is around 43, indicating that the market is neutral to slightly bearish (approaching the oversold zone).
The RSI according to CryptoWaves is as follows:
3. Verify token compliance using Grok, which cross-references market sentiment with data from various sources (e.g., white papers, community feedback) to analyze potential scams or assess fundamentals.
For example, according to the experiment, users can ask Grok: “Is Bittensor (TAO) a scam token?”
Grok's data shows that TAO scores high on legitimacy indicators (such as Coingecko/CoinMarketCap listing and open source audits), but its low transparency in the early stages makes it riskier than blue-chip coins such as Bitcoin.
It is a high-return investment in decentralized AI (subnet gameplay may bring 20-100x returns), but you need to do your own research (DYOR) and only invest money you can afford to lose.
If bullish on the convergence of AI and crypto, its valuation is lower than XRP (approximately $11,000 per TAO equivalent market capitalization). For bears, this insider-led setup resembles an "affinity scam." Overall, TAO is a genuine project promoting Web3 AI, not an outright scam.
It should be noted here that Grok can be used as an auxiliary tool for detecting the market in short-term trading. By combining X sentiment, technical indicators (such as RSI) and fundamental checks, it can provide early momentum signals and risk assessments. It is particularly suitable for meme coins or emerging tokens.
However, limitations of Grok's free version, potential errors in sentiment analysis, and lack of real-time trading integration restrict this AI to a supporting role rather than an independent professional trading analysis platform.
Traders should use precision alerts and supplement real-time data sources to optimize trading strategies and reduce timing risk in highly volatile markets.
How to use ChatGPT to build a cryptocurrency trading framework?
1. After using Grok to identify social signals, the next step is to convert them into a structured trading plan. ChatGPT can help traders define entry points, stop-loss points, exit points, and even reflect on trades after they close.
The aforementioned Grok example highlights bullish sentiment driven by TAO's user base, integration, and long-term growth potential. Based on the experiment, users can ask ChatGPT: "Based on current bullish sentiment around TAO, what short-term price action would confirm momentum for a day trade?"
2. Ask ChatGPT to analyze bearish risk factors
The aforementioned Grok pointed out some issues with the project, such as token centralization, opaque governance, and past hacks. Traders can then use ChatGPT to ask, "Given bearish sentiment and risk factors for TAO, what are safe conditions for a short today?"
Here’s ChatGPT’s response:
Finally, in the trading world, while AI has reduced trading costs for retail investors, its limitations and challenges cannot be ignored. These include the inability to predict black swan events, and AI's accuracy being highly dependent on data quality and source, as well as user prompts. For the average trader, the ideal approach is to combine AI with human judgment to create a complementary effect.
Many institutional success stories, such as Renaissance Technologies’ Medallion Fund and BlackRock’s Aladdin system, demonstrate the powerful potential of AI combined with human oversight.
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