Comparative Study of Bitcoin Price Prediction

ArXiv ID: 2405.08089 “View on arXiv”

Authors: Unknown

Abstract

Prediction of stock prices has been a crucial and challenging task, especially in the case of highly volatile digital currencies such as Bitcoin. This research examineS the potential of using neural network models, namely LSTMs and GRUs, to forecast Bitcoin’s price movements. We employ five-fold cross-validation to enhance generalization and utilize L2 regularization to reduce overfitting and noise. Our study demonstrates that the GRUs models offer better accuracy than LSTMs model for predicting Bitcoin’s price. Specifically, the GRU model has an MSE of 4.67, while the LSTM model has an MSE of 6.25 when compared to the actual prices in the test set data. This finding indicates that GRU models are better equipped to process sequential data with long-term dependencies, a characteristic of financial time series data such as Bitcoin prices. In summary, our results provide valuable insights into the potential of neural network models for accurate Bitcoin price prediction and emphasize the importance of employing appropriate regularization techniques to enhance model performance.

Keywords: LSTM, GRU, Bitcoin, neural networks, time series forecasting, Cryptocurrency

Complexity vs Empirical Score

  • Math Complexity: 3.0/10
  • Empirical Rigor: 6.0/10
  • Quadrant: Street Traders
  • Why: The paper uses standard deep learning architectures (LSTMs/GRUs) with basic regularization (L2), representing accessible math, but employs concrete backtesting methodology (5-fold cross-validation) and reports specific performance metrics (MSE) on real financial data.
  flowchart TD
    A["Research Goal<br>Predict Bitcoin Price"] --> B{"Data Input"}
    B --> C["Time Series Data"]
    
    C --> D["Methodology<br>5-Fold Cross-Validation + L2 Regularization"]
    
    D --> E["Computational Process<br>Train LSTM & GRU Models"]
    
    E --> F["Outcome"]
    
    F --> G["GRU Model<br>MSE: 4.67"]
    F --> H["LSTM Model<br>MSE: 6.25"]
    
    G & H --> I["Key Finding<br>GRU outperforms LSTM for Bitcoin prediction"]