Bitcoin price prediction based on fear & greed index

Abstract

This study investigates the Fear & Greed Index, an indicator designed to reflect market sentiment regarding Bitcoin price, intending to utilize it as a predictive parameter for future price fluctuations. Due to the substantial volatility in Bitcoin prices and its significant influence on prediction outcomes, the dataset was preprocessed through monthly filtering and normalization. To forecast Bitcoin prices, an array of machine learning algorithms, including linear regression, random forest, and XGBoost, as well as their enhanced counterparts, were employed. The optimal model was identified by comparing the Grid Search XGBoost analysis results. This research holds implications for accurately predicting Bitcoin prices and underscores the impact of market sentiment on its valuation.