Papers › Sentiment-Based Prediction of Alternative Cryptocurrency Price Fluctuations Using...

Sentiment-Based Prediction of Alternative Cryptocurrency Price Fluctuations Using Gradient Boosting Tree Model

1 May 2018arXiv:1805.00558links table onlyarchive 2025-07-28

Tianyu Ray Li, Anup S. Chamrajnagar, Xander R. Fong, Nicholas R. Rizik, Feng Fu

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In this paper, we analyze Twitter signals as a medium for user sentiment to predict the price fluctuations of a small-cap alternative cryptocurrency called \emph{ZClassic}. We extracted tweets on an hourly basis for a period of 3.5 weeks, classifying each tweet as positive, neutral, or negative. We then compiled these tweets into an hourly sentiment index, creating an unweighted and weighted index, with the latter giving larger weight to retweets. These two indices, alongside the raw summations of positive, negative, and neutral sentiment were juxtaposed to ∼400 data points of hourly pricing data to train an Extreme Gradient Boosting Regression Tree Model. Price predictions produced from this model were compared to historical price data, with the resulting predictions having a 0.81 correlation with the testing data. Our model's predictive data yielded statistical significance at the p < 0.0001 level. Our model is the first academic proof of concept that social media platforms such as Twitter can serve as powerful social signals for predicting price movements in the highly speculative alternative cryptocurrency, or "alt-coin", market.

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