BITCOIN PRICE PREDICTION BY USING ARIMA

BITCOIN PRICE PREDICTION BY USING ARIMA

Abass Hassan, Paila Nithin, Bammidi Vidyasagar, Divvala Abhishek Varma, Pannarsu Tejesh, Kalla Praveen, Kalla Shankar Ram Satyam Naidu, Podakanti Satyajith Chary

Department of Computer Science and Engineering
Lovely Professional University
                               Phagwara, India

ABSTRACT

Cryptocurrency markets have emerged as a dynamic and intriguing domain, with Bitcoin at the forefront, captivating the attention of investors, researchers, and enthusiasts alike. The volatile nature of Bitcoin prices presents both opportunities and challenges for market participants seeking to understand and anticipate its movements. In this study, we delve into the realm of time series analysis to explore the feasibility of predicting

The research journey begins with meticulous data preprocessing steps to ensure the quality and integrity of the input data. Leveraging Python libraries such as pandas and NumPy, we cleanse and format the historical Bitcoin price data, laying the foundation for subsequent analysis. Key preprocessing tasks include handling missing values, normalization, and addressing any anomalies or outliers that may distort the underlying patterns.

With the data prepared, our attention turns to assessing the stationarity of the Bitcoin price time series—a fundamental prerequisite for applying classical time series models. Through visual inspection and statistical tests such as the Augmented Dickey-Fuller (ADF) test, we ascertain the presence of trends or seasonality that could influence the modelling process. To mitigate such effects, we employ techniques such as differencing and transformations, including the Box-Cox transformation, to stabilize the variance of the data.

Armed with a stationary time series, we embark on the core of our analysis: modelling Bitcoin prices using Autoregressive Integrated Moving Average (ARIMA) and Seasonal Autoregressive Integrated Moving Average with Exogenous Variables (SARIMAX) models. These models, renowned for their versatility and effectiveness in capturing temporal dependencies, offer a sophisticated framework for forecasting time series data. Guided by the principles of parsimony and model selection criteria such as the Akaike Information Criterion (AIC), we systematically explore the parameter space to identify the optimal specifications for our models.

The efficacy of the chosen models is rigorously evaluated through diagnostic checks, encompassing residual analysis, model fit statistics, and out-of-sample validation. Insights gleaned from these assessments inform our confidence in the   models' predictive capabilities and guide our interpretation of the forecasted outcomes.

Finally, armed with a validated model, we turn our gaze to the future, employing it to generate forecasts of Bitcoin prices for

forthcoming periods. Visualizations juxtaposing predicted prices against observed values provide a compelling narrative of the model's performance and offer stakeholders valuable insights into potential market trends and dynamics.

In summary, this research contributes to the burgeoning field of cryptocurrency analytics by showcasing the application of time-tested statistical methodologies to forecast Bitcoin prices. By leveraging the power of ARIMA and SARIMAX models, we illuminate the intricate patterns underlying Bitcoin's price dynamics, empowering market participants with actionable intelligence for informed decision-making in an ever-evolving landscape.

Keywords
Cryptocurrency Markets, Bitcoin Price Prediction, Time Series Analysis, Python Programming, Data Preprocessing, Pandas, NumPy, Stationarity Testing, Augmented Dickey-Fuller (ADF) Test, Box-Cox Transformation, ARIMA Model, SARIMAX Model, Model Selection, Akaike Information Criterion (AIC), Diagnostic Checks, Residual Analysis, Out-of-Sample Validation, Forecasting, Visualization, Market Trends, Decision-Making, Cryptocurrency Analytics