Nasdaq prepares to be a tool to predict price movements of cryptocurrencies

The center will analyze social networks and other alternative sources to offer investors a way to evaluate the movement of the cryptocurrency market.

Nasdaq could be on the verge of granting institutional investors an analytical advantage in the negotiation of hundreds of cryptocurrencies.

According to a person familiar with the company's plans, the US stock exchange is preparing to add tools to predict price movements of cryptographic assets to its analysis Hub. The center, launched last year, draws on machine learning and natural language processing (NLP) capabilities to analyze through social networks and other alternative data sources to offer investors a better way to assess the movement of the market.

To date, Analytics Hub has focused on traditional assets, but the addition of crypto seems to be another sign of Wall Street's growing interest in the emerging sector.

Bill Dague, head of alternative data at Nasdaq, told CoinDesk that "given the abundance of interests, we are exploring datasets related to cryptocurrencies."

But Dague softened that response and added:

"It remains to be seen whether or not we launch a product related to cryptography."

On the other hand, the source, who is working with Nasdaq in the effort, was determined, saying that the new encryption functionality is currently being tested before the planned release.

The source told CoinDesk that the service would provide sentiment on some 500 cryptographic assets, and that a three-pronged approach is needed for its analysis, looking at the flow of funds through wallets, exchange data and social networks.

"There's the feeling part of social media, so it applies machine learning and NLP, which will start with Twitter and could include StockTwits and then, maybe, Reddit," the source said.

The news comes after Nasdaq CEO Adena Friedman said earlier this year that the company was considering offering some kind of Bitcoin futures product. Also, in April, she said that Nasdaq would even consider creating an encryption exchange.

However, Nasdaq will not be alone in its search. Other well-known players in the field of alternative data analysis include Reuters and Bloomberg, as well as Dataminr, which has previously commented on the provision of Twitter data to encryption operators.