Real-Time Data Visualization of Cryptocurrency Trading Activity
After a disastrous 2022, the highly volatile crypto market appears to be staging a recovery, with several key cryptocurrencies seeing their values nearly double since the beginning of the year. Despite the market’s wild gyrations and the collapse of popular crypto exchange FTX Trading, the global cryptocurrency market was valued at $4.67 billion at the end of 2022 and most analysts are predicting it to grow at a rate of around 12% over the next several years. The number of people engaged in crypto trading continues to expand as well, with 2022 seeing an increase of 39% to around 425 million in December 2022 — despite the widespread selloffs of all cryptocurrencies that occurred during the year. In this article, we’ll demonstrate how Altair’s data analytics solutions can empower its users with top-tier cryptocurrency data visualization capabilities.
Cryptocurrency Trading Data Analytics
Making money trading in such a volatile market requires clear views of cryptocurrency data visualization, algorithm performance, exchange behaviors, and futures markets. Altair® Panopticon™, a data visualization software, is a perfect tool for monitoring and analyzing the fast-moving crypto market. Investment firms, exchanges, and brokers use Panopticon to build and publish custom visual analytics applications integrated with their own data sources. Panopticon can connect to historic timeseries databases, streaming data sources, web services, and more.
Portfolio managers and traders use Panopticon to build and publish custom dashboards that allow them to track trading activity in real time, view historical performance, make on-the-fly performance comparisons between strategies, exchanges, currencies, and traders, and monitor competitors’ activity.
The video below shows how you can use Panopticon to visually monitor live quotes and trading data at high frequency, analyze historic post-trade data for any time periods, display order books, manage streaming data sources, and set up proactive alerts.
This demonstration shows how traders can visualize the performance of the 200 largest crypto assets based on market caps. A scatterplot cryptocurrency data visualization dashboard is ideal for identifying the assets with the highest daily returns. The dashboard also lets us look at last month’s performance — and calculate volatility for any selected period — on the fly. For example, a trader can examine trading activity for Ethereum and see where each coin is being traded, which exchange is offering the best price and spread, and which exchange has the lowest fees. The system calculates and displays trading activity, including trade size and pricing for a selected coin, along with moving averages and Bollinger bands. Proactive alerts flag traders automatically when the system spots profitable trading opportunities. They can then monitor their strategies in real time and see their own trades and orders as they execute, and then examine the post-trade statistics.
In technical terms, the requirements for monitoring and analyzing crypto trading activity are like those for any other asset class, including equities, rates, bonds, and foreign exchange, as the many global banks and other trading firms that have adopted Panopticon have discovered over the past 20 years.
Real-Time Cryptocurrency Trading Visualization
The human psycho-visual system is one of the most sophisticated parts of our bodies; over millions of years, we’ve evolved to be extremely sensitive to visual cues. Effective visual data discovery tools let users tap into that resource to see and understand what’s really going on in what seems like a vast sea of numbers. Without high-performance cryptocurrency data visualization tools and the ability to utilize multiple streams of real-time and time series data effectively, operating a profitable cryptocurrency trading desk is nearly impossible. Anyone can get lucky with a few well-timed trades, but making money day after day requires the ability to access, process, and visualize:
- Data sources of any size
- Data that's changing in real time at very high frequencies
- Data stored in multiple system types and in multiple formats
Panopticon provides a broad range of high-density information visualizations designed to help users comprehend complex data in simple, intuitive ways. The software makes it easy to identify outliers, clusters, trends, and anomalies in seconds. Essentially, crypto traders use Panopticon to reduce the time it takes to identify problems and opportunities, understand their implications, and take appropriate actions.
Panopticon connects directly to real-time feeds from data providers, as well as low latency in-memory time series databases like Kx kdb+, SQL and NoSQL databases, message queues like Kafka, and flat files, including spreadsheets. The software offers multiple deployment options and supports AWS, Azure, Google Cloud, and Oracle Cloud. It’s also fully compatible with containerized cloud implementations using Docker. Users can also implement Panopticon on-premises to support any unique security requirements.
The key to making profitable crypto trades is ensuring that orders are executed quickly. If you can’t see how much liquidity an exchange is offering, you can place suboptimal trades that cause you to miss out on profit opportunities if the market moves against you. Trading fees can also reduce profits, which is why it’s critical that your cryptocurrency data visualization tools help you understand how an exchange’s fee structure will affect your bottom line.
Applications Beyond Cryptocurrency Trading
Panopticon does more than cryptocurrency data visualization – other departments can use it to analyze massive amounts of fast-changing data. In addition to trading analytics, applications include:
Market Risk Analysis
Many firms use Panopticon to replace or augment traditional tabular risk reports with interactive analytical dashboards. Risk teams can develop dashboards optimized to display DV01 (also called “Price Value of a Basis Point”) calculations, Value at Risk (VaR), options deltas, vega, gamma, and so on — across all asset classes (crypto, equities, equity options, FX, fixed income, and derivatives).
Portfolio managers understand that their visualizations of counterparty risk must cope with multi-layered, aggregated, and normalized data sets, including domiciles, limits, parents, parent-to-child roll-ups, limits applied at each level, and transaction data superimposed at each level. It’s a complicated task that, in most cases, will also utilize data from many different data repositories in the bank. Panopticon’s ability to federate data from multiple sources is a critical function in such deployments.
Panopticon provides front office personnel with a credit trading reporting tool that supports the regulatory requirements affecting banking operations. With Panopticon, traders can see multidimensional market value versus notional value displays and perform in-depth analysis of historical trends. They can visualize overall, aggregated position data by sector, book, exchange, currency, trader, or individual issuer. In most cases, a Panopticon treemap visualization is embedded in credit trading dashboards to facilitate market value, capitalization, and DV01 analysis. Panopticon empowers traders to see meaningful sets of dynamic risk attributes in multiple partitions, hierarchies, and time periods.
Democratizing Finance with DeFi and Crypto
Watch this episode of our Future Says series to learn how Nikita Fadeev, portfolio manager at Fasanara Capital and a member of Forbes’ “30 under 30” list views the democratization of financial services through decentralized finance (DeFi), cryptocurrency, and non-fungible tokens (NFTs). The level of media attention that the world of cryptocurrency is attracting often feels inversely proportionate to the degree of insight that’s available. What are the current key trends shaping the crypto domain, and how can you understand more about where the financial services industry is heading?
Tune into this episode to discover:
- Why FinTech disruptors can learn from traditional financial institutions
- Why youth (usually) beats experience in these uncharted waters
- The environmental considerations of Bitcoin mining - and why energy providers should monetize their excess capacity
- The issues related to digital currency regulation
- And more
Watch "Democratizing Finance with DeFi and Crypto"
To learn more about Panopticon and its cryptocurrency data visualization capabilities, visit https://altair.com/panopticon. To learn more about Altair’s financial services capabilities, visit https://altair.com/financial-institutions.