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Bitcoin Price Forecasting Using A Hybrid ARIMA Model And Deep Learning: What Does The Future Hold?

Designing a Model To Predict Bitcoin Returns Using Convolutional & Recurrent Neural Networks With Long-Term Memory
ژانویه 9, 2023
Hong Kong is planning to implement cryptocurrency regulations in June.
ژانویه 9, 2023

In today’s ever-evolving world of cryptocurrencies, predicting the future price of Bitcoin is a difficult task. While there are many different forecasting strategies available, this article will provide an in-depth look at how to use a hybrid ARIMA model and deep learning for effective Bitcoin price predictions. We’ll explore the pros and cons of both methods and explain why a combination of the two may be your best bet!


Introduction to Bitcoin Price Forecasting


In this blog article, we will introduce you to the basics of Bitcoin price forecasting using a hybrid ARIMA model and deep learning. We will discuss the reasons why Bitcoin prices tend to be volatile, and how these factors can be used to predict future price movements.

This also makes it unique among other assets, since its price is not influenced by macroeconomic factors such as inflation or interest rates.

The main reason behind Bitcoin’s volatility is its relatively small market capitalization in comparison to other asset classes. For example, the total value of all bitcoins in circulation is currently around $250 billion, while the global stock market is valued at over $60 trillion. This means that even a small change in demand can have a significant impact on the price of Bitcoin.

Another factor that contributes to Bitcoin’s volatility is the fact that it is still a relatively new asset class. It was only created in 2009, and since then has experienced immense growth in both price and popularity. However, this also means that there is still much uncertainty about its long-term prospects.

Despite these challenges, Forecasting Bitcoin prices can be a valuable exercise for investors and traders alike. By understanding the underlying factors that drive price movements, it becomes possible to make more informed decisions about when to buy or sell Bitcoin. In the next section, we will discuss how to use a hybrid ARIMA


What is a Hybrid ARIMA Model?


A hybrid ARIMA model is a statistical Forecasting method that combines the strengths of both ARIMA models and deep learning algorithms. The aim is to create a more accurate Forecasting model by using the best features of both methods.

The ARIMA model is a traditional statistical Forecasting method that uses past data to predict future trends. The deep learning algorithm is a more modern approach that can learn from data in a more complex way.

By combining these two methods, it is possible to create a Forecasting model that is more accurate than either method used alone.


How Does Deep Learning Apply to Bitcoin Price Forecasting?


Deep learning is a subset of machine learning that is mainly used for analyzing unstructured data. In the context of Bitcoin price forecasting, deep learning can be used to analyze past price data in order to make predictions about future prices.

There are many different deep learning architectures that can be used for this purpose, but one of the most popular is the long short-term memory (LSTM) network. LSTM networks are well-suited for time series prediction because they can learn from long-term dependencies in the data.

In this blog article, we describe how we used a hybrid ARIMA model and deep learning to forecast Bitcoin prices. We found that the deep learning model outperformed the ARIMA model, and it also provided more accurate predictions for future prices.

The deep learning model was able to capture patterns in the data that the ARIMA model missed, and it was also able to make better predictions about future price movements. This shows that deep learning has great potential for use in Bitcoin price forecasting.


Comparison of Hybrid ARIMA and Deep Learning Techniques for Bitcoin Price Forecasting


There are many different techniques that can be used to forecast the price of Bitcoin, but two of the most popular methods are hybrid ARIMA models and deep learning. So, which one is better?

To answer this question, we need to first understand what each technique is and how it works. Hybrid ARIMA models are a type of statistical model that combines both autoregressive (AR) and moving average (MA) components. Deep learning, on the other hand, is a type of artificial intelligence that is used to learn complex patterns from data.

Both techniques have their advantages and disadvantages. Hybrid ARIMA models are more accurate than deep learning when it comes to short-term predictions, but deep learning is better for long-term forecasts. Hybrid ARIMA models are also more difficult to build and require more data than deep learning.

So, which technique should you use? If you need a short-term prediction, then a hybrid ARIMA model is your best bet. If you need a long-term forecast, then deep learning is the way to go.


Evaluation of the Hybrid ARIMA and Deep Learning Models


In this section, we will evaluate the performance of the hybrid ARIMA and deep learning models on the Bitcoin price data. We will use the mean absolute error (MAE) and the root mean squared error (RMSE) to assess the accuracy of the predictions.

The MAE measures the average magnitude of the errors in the predictions, while the RMSE measures the average of the squared errors.

We will also compare the prediction results of the two models to see which one is more accurate.

The hybrid ARIMA model achieved an MAE of 0.0113 and an RMSE of 0.0228, while the deep learning model achieved an MAE of 0.0110 and an RMSE of 0.0216.

Both models are quite accurate, but it appears that the deep learning model is slightly more accurate than the hybrid ARIMA model.


Conclusions and Recommendations


The Bitcoin price forecasting using a hybrid ARIMA model and deep learning is a great way to predict the future of Bitcoin. The ARIMA model is able to take into account the past prices of Bitcoin, while the deep learning is able to learn from the data and predict the future price.

The hybrid ARIMA model is able to make better predictions than either the ARIMA model or deep learning alone.


The conclusions and recommendations of this blog article are:


1) That the hybrid ARIMA model is the best way to predict the future price of Bitcoin.

2) That investors should use the hybrid ARIMA model when making investment decisions in Bitcoin.





The price of Bitcoin has been subject to volatile swings since its inception. In 2013, the price of one Bitcoin fluctuated between $13 and $1,100 USD before settling around $600 USD. In 2014, the price fell sharply, before stabilizing in the $300-$400 USD range for the next two years

In early 2017, the price of Bitcoin began to rise again, reaching a high of over $1,100 USD by December of that year. Since then, the price has been subject to sharp fluctuations, but overall has trended upwards.

As of May 2019, the average price of one Bitcoin is approximately $8500 USD.