A Novel Method of Blockchain Cryptocurrency Price Prediction Using Fractional Grey Model

Abstract

Cryptocurrency prices have the characteristic of high volatility, which has a specific resistance to cryptocurrency price prediction. Therefore, the appropriate cryptocurrency price predictive method can help reduce the investment risk of investors. In this study, we proposed a novel prediction method using a fractional grey model (FGM (1,1)) to predict the price of blockchain cryptocurrency. Specifically, this study established the FGM (1,1) through the closing price of three representative blockchain cryptocurrencies (Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC)). It adopted the PSO algorithm to optimize and obtain the optimal order of the model, thereby conducting prediction research on the price of blockchain cryptocurrency. To verify the predictive precision of the FGM (1,1), we mainly took MAPE, MAE, and RMSE as the judging criteria and compared the model’s predictive precision with the GM (1,1) through experiments. The research results indicate that within the data range studied, the predictive accuracy of the FGM (1,1) in the closing price of BTC, ETH, and LTC has reached a “highly accurate” level. Moreover, in contrast to the GM (1,1), the FGM (1,1) outperforms predictive capability in the experiments. This study provides a feasible new method for the price prediction of blockchain cryptocurrency. It has specific references and enlightenment for government departments, investors, and researchers in theory and practice.