Cryptocurrency Market Trend Analysis and Prediction

International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue VII, July 2018 | ISSN 2321–2705

Cryptocurrency Market Trend Analysis and Prediction

Saranya S.#

^#Financial Engineering, Department of Mechanical Engineering, College of Engineering, Trivandrum, Kerala, India

Abstract— From a long time, there have been predictions happening in the financial market, such as stock market and bond market. Cryptocurrency market is on rise since the past few years but predictions about the market trend followed by these currencies is still in its nascent state. This study is based on the relationship between current sentiments of public opinion and price variation in this market, and is concerned with predicting whether cryptocurrency market will trend upward or downward using sentiment analysis, which is one among the various applications of natural-language processing. Bitcoin is the selected cryptocurrency. A platform to predict the future market trend of cryptocurrency market is built using Naïve Bayes classifier, in Python language. The validity of the model is tested by finding correlation between sentiment polarity of tweets with price values of respective time period. An accuracy of 89.86% is achieved by this model.

Keywords—Cryptocurrency, Sentiment Analysis, Natural-language processing, Naïve Bayes classifier, Bitcoin, Python.

I. INTRODUCTION

The method of making an attempt to determine the future value of any financial instrument or an asset that is used for trading is known as a financial market prediction. The successful prediction of the future price or trend of any financial instrument could yield significant benefit as in profit and returns. As technology is developing, there are many improvements in the prediction of future prices, market trends and market returns. Financial market prediction is not an entirely new discovery or event. Prediction of mature financial markets have been researched on and studied at length, where stock market is the long standing choice to continue predictions on. . The cryptocurrency market is on an up rise since the past few years, whereas predictions about trends of this market is still in its nascent stage. There are no strategies that are established in this market in order to carry out the trading. 2017 has been a year where cryptocurrency markets dominated in the public making news throughout. Many new applications, platforms and technologies were being launched that year.

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