Quantify news to predict Bitcoin prices

[coinalysis]

I found out that neural networks (NN) have been broadly used to predict Bitcoin (or other cryptocurrency) prices. The common approach is to use historic price data to train the NN. When I did this, I run into troubles in times of high volatility when there is a huge jump or a crash. And this was the problem everybody else run into using ONLY historic price data.

To solve this problem I used a second NN to quantify the news to get a sentiment which I also included for the price prediction. At the moment I am using headlines and started also including tweets from twitter.

I would like to know what you think about this approach. If you are interested in this method I would be more than happy if You visited my Blog about this topic

BR, O.

[1715153443]

1715153443

[shulio]

You can also use technical indicators like RSI, MA, EMA, BB. Indicators may help your NN to predict future price properly.

[N-gen]

well, this is one piece of information that can help me to trade, because in this case, I still do not really understand, I want to know your prediction for bitcoin this year? is it true that bitcoin will touch the price 500.000 USD within the next 2 years?

[coinalysis]

You can also use technical indicators like RSI, MA, EMA, BB. Indicators may help your NN to predict future price properly.

Thanks for the hint, but unfortunately I also included these technical indicators which gave just a minor improvement, way less than 1 percent. The NN should be able to detect patterns on its own. Calculate technical indicators based on historical data doesnt give you more information. If the network is trained well, there should at least be NO IMPROVEMENT becasue NO NEW DATA are fed in. I also would say that it should get even worse because assuming the same time for training the performance should get better the less redundant information you get. And addin gindicators should be redundant because its nothing new, its based on historical data.

[coinalysis]

well, this is one piece of information that can help me to trade, because in this case, I still do not really understand, I want to know your prediction for bitcoin this year? is it true that bitcoin will touch the price 500.000 USD within the next 2 years?

If you are interested in predictions that far in the future, I have to tell you that I cannot predict it. And I am completely sure that nobodyis able to make predictions for a timerange that large. If you make such a prediction just based on historical data this wil not work because the price is influenced by much more that just the price history. If you just assume that Trump will twitter "Trading Bitcoin will result in jail", or if the European Union will forbid Bitcoin trading, it will crash and I think it will never come back. And if you go to even longer timeframes, you have also to think about other things. E.G quantum computing could raise huge problems, .
making Bitcoins unsecure. But yeah. If e.g. the European Union tells that Bitcoin will be officially allowed as currency, there will be an immens rise. These are extrem news, but I hope you get what I wanted to explain. I try to quantify the news to make reasonable trading decisions.

I try to get a solid idea about how the cryptocoin will perform in the near future, not more than one day. This basically means that if it should rise, i buy. And as soon as there is a solid reason based on news and historic prices it will drop, I sell.

If you just want to buy and hold cryptos, you dont know what will happen. Until now, Bitcoin recovered from every crash. And yeah...maybe it will never collapse. But if someone tells you that he is 100% sure it will never crash, he is definetely lying.

My goal is to make reasonable trading decisions

[heringasem]

Indicators doesn't work just like it seems right now. They all have been created for Forex, they do not apply on cryptos since the market is moving on another pattern. It is all created by fear + emotions + news, not on indicators.

You can also use technical indicators like RSI, MA, EMA, BB. Indicators may help your NN to predict future price properly.

[Aleister Crowley]

Indicators doesn't work just like it seems right now. They all have been created for Forex, they do not apply on cryptos since the market is moving on another pattern. It is all created by fear + emotions + news, not on indicators.

You can also use technical indicators like RSI, MA, EMA, BB. Indicators may help your NN to predict future price properly.

will panic ii take us on the right track? I'm not sure if the bitcoin price will fall very deep.. this is already low enough and the time is right for purchase. harapa that south korea will re-enter and start again crypto adoption ,, which might be able to pump the price ..,

[tomahawk9]

I really like this approach, using the news as another indicator to gather data and for patterns to predict possible swings in the price does sounds like something I can get behind. Unfortunately, I don't know much about computing systems so I find it hard to understand how this is suppose to work properly, but if you can make it work then I feel like it might be something that can possibly provide good results.

Also, you might receive better feedback if you post this in the Speculation board, or perhaps in the Bitcoin Discussion board.

[coinalysis]

I really like this approach, using the news as another indicator to gather data and for patterns to predict possible swings in the price does sounds like something I can get behind. Unfortunately, I don't know much about computing systems so I find it hard to understand how this is suppose to work properly, but if you can make it work then I feel like it might be something that can possibly provide good results.

Hey, thank You for the feedback. I think you will say I am right when I tell you that you can make rough estimates of future prices based on price history. Somehow there are patterns in the prices which are somehow conected to future prices. You can imagine a neural network (NN) as a black-box where you input the price history and it is learning about the patterns to predict future prices. A very good and very basic introduction is given in this youtube-video.

But the price is not only driven through the history, the main influence comes from the news. If .g. the European Union would say "Trading Bitcoin will be forbidden", this would result in a large crash. This is an extrem example, but this is basically what I tried in my blog: Quantifying news. This headline would give a negative sentiment and therefore the neural network would predict a huge drop in Bitcoin price.

I hope it's a bit more clear now how this basically works. I linked a few pages in the blog so that you can get further information.

Also, you might receive better feedback if you post this in the Speculation board, or perhaps in the Bitcoin Discussion board.

Thanks for this hint. Unfortunately I just know a bit about the prediction-part. But to blogging and posting I am completely new

[cryptoalfs76]

I found out that neural networks (NN) have been broadly used to predict Bitcoin (or other cryptocurrency) prices. The common approach is to use historic price data to train the NN. When I did this, I run into troubles in times of high volatility when there is a huge jump or a crash. And this was the problem everybody else run into using ONLY historic price data.

To solve this problem I used a second NN to quantify the news to get a sentiment which I also included for the price prediction. At the moment I am using headlines and started also including tweets from twitter.

I would like to know what you think about this approach. If you are interested in this method I would be more than happy if You visited my Blog about this topic

BR, O.

Yes it is true,that news a bout crypto currency,currenct events,blogs media,is some source to quantify the swinging of bitcoin price,and that kind of information is very useful to us,especially those traders who want to gain a good profit.news is so important to our daily life because   of this we know the different happen to our country especially to the current event of crypto currency,by there givin information we become knowledgeable about the bitcoin world and find the perfect timing,to when we sell or buy our bitcoin  in process of trading investment.

[Kalispera]

i think the price will rise till 18k usd about those few months..

[exstasie]

To solve this problem I used a second NN to quantify the news to get a sentiment which I also included for the price prediction. At the moment I am using headlines and started also including tweets from twitter.

I would like to know what you think about this approach.

I find this interesting but I'm pretty skeptical of the results you could produce at this point. What kind of logic do you employ to quantify/qualify news sentiment or Twitter sentiment? I agree that sentiment is extremely important to trading this market, but reading sentiment is highly subjective. In my case, it's taken years to become acutely aware of trader/speculator sentiment and learn to trade against it.

The most useful indicator that I can think of (in this context) would be detecting decidedly bearish vs. bullish opinions/charts to give a broad overview of position commitment. When everyone is bearish, you should expect bullish resolution. When everyone is bullish, you should expect bearish resolution.