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Forecasting Bitcoin: A Comparative Analysis of Traditional versus Machine Learning Approach

In: Digital Banking and Finance A Handbook

Author

Listed:
  • Muhammad Arslan
  • Akmal Shahzad
  • Anum Shafique
  • Wajid Shakeel Ahmed

Abstract

This study attempts to forecast Bitcoin using both traditional and machine learning approaches to determine which methods are more robust. For the traditional method, the GARCH method is used to forecast Bitcoin returns. For the machine learning method, LSTM is used. A hybrid approach of GARCH–LSTM is also applied to the data to compare the results. Hourly data for Bitcoin are obtained from Coin-MarketCap for three years, from 2019 to 2022. The findings of the study reveal that machine learning methods outperform traditional methods. The study has useful implications for researchers.

Suggested Citation

  • Muhammad Arslan & Akmal Shahzad & Anum Shafique & Wajid Shakeel Ahmed, 2025. "Forecasting Bitcoin: A Comparative Analysis of Traditional versus Machine Learning Approach," World Scientific Book Chapters, in: Christopher E C Gan & Nirosha Hewa-Wellalage & Ahmed Imran Hunjra (ed.), Digital Banking and Finance A Handbook, chapter 10, pages 257-279, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9781800616257_0010
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    More about this item

    Keywords

    FinTech; Digital Era; Financial Industry; Digital Technology; Digital Financial Industry; Digital Finance; Financial Inclusion; Bank Stability; Emerging Economies; Bibliometric Analysis; Digital Finance Revolution; Global Impacts; Digital Innovation; Insurance; Big Data Applications; Digital Assets in Disarray; Forecasting Bitcoin; Machine Learning Approach; Economic Policy Uncertainty; Cryptocurrency; Bank Shares; Digital Age; Corporate Governance; Risks; Rewards; Assets Tokenization; Future of Money; Central Bank Digital Currencies; Bank Innovation; Risk-Taking Perspective;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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