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A New Dual Normalization for Enhancing the Bitcoin Pricing Capability of an Optimized Low Complexity Neural Net with TOPSIS Evaluation

Author

Listed:
  • Samuka Mohanty

    (Department of Computer Science and Engineering, Siksha ‘O’ Anusandhan (Deemed to be) University, Bhubaneswar 751030, Odisha, India)

  • Rajashree Dash

    (Department of Computer Science and Engineering, Siksha ‘O’ Anusandhan (Deemed to be) University, Bhubaneswar 751030, Odisha, India)

Abstract

Bitcoin, the largest cryptocurrency, is extremely volatile and hence needs a better model for its pricing. In the literature, many researchers have studied the effect of data normalization on regression analysis for stock price prediction. How has data normalization affected Bitcoin price prediction? To answer this question, this study analyzed the prediction accuracy of a Legendre polynomial-based neural network optimized by the mutated climb monkey algorithm using nine existing data normalization techniques. A new dual normalization technique was proposed to improve the efficiency of this model. The 10 normalization techniques were evaluated using 15 error metrics using a multi-criteria decision-making (MCDM) approach called technique for order performance by similarity to ideal solution (TOPSIS). The effect of the top three normalization techniques along with the min–max normalization was further studied for Chebyshev, Laguerre, and trigonometric polynomial-based neural networks in three different datasets. The prediction accuracy of the 16 models (each of the four polynomial-based neural networks with four different normalization techniques) was calculated using 15 error metrics. A 16 × 15 TOPSIS analysis was conducted to rank the models. The convergence plot and the ranking of the models indicated that data normalization plays a significant role in the prediction capability of a Bitcoin price predictor. This paper can significantly contribute to the research with a new normalization technique for utilization in varied fields of research. It can also contribute to international finance as a decision-making tool for different investors as well as stakeholders for Bitcoin pricing.

Suggested Citation

  • Samuka Mohanty & Rajashree Dash, 2023. "A New Dual Normalization for Enhancing the Bitcoin Pricing Capability of an Optimized Low Complexity Neural Net with TOPSIS Evaluation," Mathematics, MDPI, vol. 11(5), pages 1-28, February.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:5:p:1134-:d:1079426
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    References listed on IDEAS

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