Time Series Forecasting
Have you ever wondered if you could predict Bitcoin prices? It’s tricky, but with the right tools and steps, you can make educated guesses. In this post, I’ll share how I used a computer program to learn from past BTC prices and try to predict what might happen next.
What is Time Series Forecasting?
Time series forecasting is like looking at a trend over time and guessing what comes next. For Bitcoin, this means using past price patterns to predict future prices. It’s not magic—it’s math and programming.
Step 1: Preparing the Data
To get started, I needed Bitcoin price data. I found a dataset that included daily BTC prices (open, high, low, close) and trading volume. Here’s what I did with it:
- Look at the Data: I made graphs to see how prices changed over time.
- Make the Data Smaller: Computers work better with numbers between 0 and 1, so I adjusted all the prices to fit into that range.
- Split the Data into Pieces: I took chunks of 30 days (the input) and taught the program to predict the price for the next day (the output).
Step 2: Setting Up the Program to Learn
I used TensorFlow, a tool that helps computers learn patterns. Here’s how I organized the data:
- Group Data Together: I made groups of 32 chunks of data at a time (called "batches").
- Shuffle: I mixed up the data so the computer wouldn’t accidentally learn in the wrong order.
This setup made the learning process smoother and faster.
Step 3: Building the Prediction Model
The model I used is like a brain for the computer, but it’s a simpler version. It has three main parts:
- Memory (LSTM): This helps the computer remember what happened in the past.
- Dropout: This part makes sure the computer doesn’t memorize too much and mess up.
- Final Guess (Dense Layer): This is where the computer makes its prediction.
Here’s what it looks like in code:
Step 4: The Results
After training the program for a while, I checked how well it could predict prices.
- Accuracy: It was pretty good at spotting trends but wasn’t perfect.
- Mistakes: It didn’t do well when prices changed suddenly.
Here’s a graph of the actual BTC prices vs. what the computer guessed:
What I Learned
This project was a fun way to see how computers can help predict future trends. Predicting Bitcoin is hard because the prices change a lot, but with practice, the computer got better.
Next, I want to try other methods to make the predictions even more accurate.