Institutional Investors Betting Big on the Future of AI in Trading

The e-Trading Edit survey by JPMorgan has shown a significant rise in the importance of AI and machine learning, increasing from 25% in 2022 to 61% in 2024.

JPMorgan survey shows institutions increasing their use of AI in trading.

In a recent survey conducted by JPMorgan, institutional investors have expressed their confidence in the role of artificial intelligence (AI) in shaping the future of trading. The survey, titled “e-Trading Edit: Insights from the Inside,” gathered responses from 4,010 institutional traders across 65 countries.

According to the survey, a whopping 61% of the respondents believe that AI and machine learning (ML) will be the most impactful technologies for trading within the next three years. This overwhelming support for AI is a clear indication of its growing significance in the financial world.

But AI is not the only technology that traders have their eyes on. The survey also revealed that 13% of respondents considered application programming interface (API) integration as one of the most important technologies for the future of trading. Additionally, blockchain or distributed ledger technology and quantum computing each garnered 7% of the respondents’ preferences. Mobile trading applications and natural language processing secured 6% of the respondents’ choices.

🔮 Will AI really revolutionize the trading industry?

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While AI and ML have seen a steady rise in importance over the past few years, other technologies like mobile trading applications and blockchain have lost favor among investors. Since 2022, blockchain and mobile trading applications have seen a decline in investor choices by 18% and 23%, respectively. This skepticism suggests that institutional investors are placing less emphasis on these technologies in the context of trading.

However, AI has the potential to reshape the future of finance by offering various features such as trade predictions and real-time threat identification. In a 2022 report by Nvidia, it was revealed that 30% of respondents had successfully integrated AI and ML into their trading strategies, resulting in a reduction of more than 10% in annual revenue.

🧐 Are institutional investors still interested in cryptocurrency trading?

Interestingly, while institutional investors are doubling down on the role of AI in trading, their interest in cryptocurrency trading seems to be waning. According to the survey results, a staggering 78% of institutional traders have no plans to trade cryptocurrencies like Bitcoin (BTC) or digital coins in the next five years. This percentage has increased from 72% in 2023, indicating a growing reluctance to engage in crypto trading.

However, it’s worth noting that the percentage of respondents who have already started trading or plan to trade cryptocurrencies has slightly increased from 8% in 2023 to 9% in 2024.

🙅‍♀️ Why the hesitation towards cryptocurrency trading?

JPMorgan’s stance on cryptocurrencies has been a topic of debate in recent years. Despite being named an authorized participant in a popular Bitcoin exchange-traded fund (ETF) by BlackRock, JPMorgan CEO Jamie Dimon has been consistently critical of cryptocurrencies like Bitcoin. His skepticism towards digital assets could be influencing the sentiments of institutional traders within the company.

In conclusion, while AI is viewed as the most significant technology shaping the future of trading by institutional investors, enthusiasm towards cryptocurrency trading seems to be diminishing. Institutions are placing less emphasis on blockchain and mobile trading applications, opting instead for AI and other emerging technologies.

It will be interesting to see how these trends unfold and whether AI will truly deliver on its promise to revolutionize the trading industry.

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📚 Reference List:

1. Trade predictions or identifying real-time threats
2. CFTC warns AI cannot pick your next crypto winner
3. How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in
4. Bitcoin price prediction: Jamie Dimon says BTC has no value, Bitcoin going to zero
5. How to thrive in a changing crypto landscape

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