Utilizing RNN for Real-time Cryptocurrency Price Prediction and Trading Strategy Optimization

ArXiv ID: 2411.05829 “View on arXiv”

Authors: Unknown

Abstract

This study explores the use of Recurrent Neural Networks (RNN) for real-time cryptocurrency price prediction and optimized trading strategies. Given the high volatility of the cryptocurrency market, traditional forecasting models often fall short. By leveraging RNNs’ capability to capture long-term patterns in time-series data, this research aims to improve accuracy in price prediction and develop effective trading strategies. The project follows a structured approach involving data collection, preprocessing, and model refinement, followed by rigorous backtesting for profitability and risk assessment. This work contributes to both the academic and practical fields by providing a robust predictive model and optimized trading strategies that address the challenges of cryptocurrency trading.

Keywords: Recurrent Neural Networks (RNN), Time-Series Prediction, High Volatility, Backtesting, Trading Strategy Optimization, Cryptocurrency

Complexity vs Empirical Score

• Math Complexity: 6.5/10
• Empirical Rigor: 7.0/10
• Quadrant: Holy Grail
• Why: The paper employs advanced neural network architectures (LSTM, GRU, Bi-LSTM) and rigorous time-series forecasting methodology with standard metrics, and includes a detailed backtesting framework on real cryptocurrency data.

  flowchart TD
    A["Research Goal: Improve crypto price prediction & trading strategy using RNN"] --> B["Data Collection<br>Historical Crypto Price Data"]
    B --> C["Preprocessing & Feature Engineering<br>Normalization, Time-series Structuring"]
    C --> D["Model Building: RNN Architecture<br>LSTM/GRU for long-term pattern capture"]
    D --> E["Training & Validation<br>Optimize parameters on historical data"]
    E --> F["Strategy Development<br>Generate trading signals from predictions"]
    F --> G["Backtesting & Evaluation<br>Simulate trading, assess profitability & risk"]
    G --> H["Key Outcomes<br>Robust predictive model & optimized trading strategy"]