Predicting Bitcoin Prices Using Deep Learning

Abstract

    Predicting cryptocurrency price is challenging owing to high volatility, less historical data, and the impact of external parameters like news, public sentiment, and regulatory announcements. This challenge is tackled in this research by employing models of deep learning like Recurrent Neural Network (RNN), Bidirectional Long Short-Term Memory (BiLSTM) and Gated Recurrent Unit (GRU)—to predict Bitcoin's OHLC prices daily. Based on historical time-series data of Coin Codex, the research uses an autoencoder-based feature extraction method with five-day sliding window method for sequence generation. Hyperband optimization is used to tune hyperparameter of each model. The result shows that BiLSTM performs better than all the other models with minimum Mean Squared Error (MSE = 0.001183), Mean Absolute Error (MAE = 0.026090), and maximum R² score (0.980596) after optimization. The results emphasize the significance of deep learning in capturing nonlinear dynamics in time series of financial applications and bear testimony to the effectiveness of hyperparameter tuning in enhancing model accuracy. The study enhances the development of prediction tools for digital asset markets and enables more informed investment decisions.