Evaluating Hybrid Models for Predicting Cryptocurrency Prices

Due to the unstable nature of the crypto market and constantly fluctuating prices, investing in crypto can be a difficult process. Additionally, the cryptocurrency regulatory framework also comes with different challenges. However, to start investing, you can start using a hybrid cryptocurrency prediction model.

In this article, you will learn about what a hybrid cryptocurrency prediction model is and how it differs from traditional models. Moreover, this article will discuss different types of hybrid models and their benefits for investors.

Hence, to learn more, read on to the end of the article.

What Is a Hybrid Cryptocurrency Prediction Model?

When you try to predict the price of a cryptocurrency, you might have to go through various historical data, charts, graphs, etc. Also, you can learn about its intrinsic value by reading a crypto whitepaper. However, these are not enough to predict crypto prices.

This is where you need a hybrid cryptocurrency prediction model. Basically, it offers you suggestions on the basis of data. Thereby, you can make better choices while you build a crypto portfolio.

Despite volatility in the cryptocurrency market, investors and traders manage to earn profits. This is because they employ several strategies and use prediction mechanisms. As a result, they are able to foresee future price changes better.

The hybrid cryptocurrency prediction model includes a combination of technologies and strategies. Moreover, it combines AI to predict prices with better accuracy. This helps investors buy crypto earlier and put them in their respective digital wallets.

Traditional Prediction Models

Traditionally, investors predict prices of assets using two models:

1. Technical Analysis

In technical analysis, you have to analyze all the charts and graphs regarding the historical prices of a coin. Here, investors check trading volumes, moving averages, relative strength indexes, and more. With the help of this data, you have to gain insights. This way, you can forecast the prices of crypto in the future.

2. Fundamental Analysis

Fundamental analysis uses both quantitative and qualitative information to find the intrinsic value of a crypto project. For instance, fundamental analysis will evaluate the market and assess the growth potential of a coin.

When you perform crypto fundamental analysis, you have to assess the project team. Then, you need to assess how the technology works and the blockchain system. Apart from that, fundamental analysis also involves the utility of the token, its use cases, and long-term applications.

To learn how to analyze crypto prices using technical analysis and fundamental analysis, visit Coinfomania to read its useful blogs.

Different Hybrid Cryptocurrency Prediction Models

Hybrid cryptocurrency prediction models came out after the introduction of AI. In fact, before AI, investors had to manually go through data charts or use spreadsheet tools. This way, they could understand historical price changes in cryptocurrencies.

However, with the popularization of AI, price prediction has become simpler as investors automate the analysis process. Basically, AI has the capability of forecasting bulk data as it analyzes patterns faster than a human. Hence, it is better to use AI for repetitive tasks.

As a result, with the help of these technologies, an investor can analyze big chunks of data within minutes.

A hybrid price prediction model is a combination of various new technologies and human intervention. The following are the various tech models that you can use:

a. Machine Learning Algorithm

Every hybrid cryptocurrency pricing model consists of a machine-learning algorithm. Basically, it helps in completing certain tasks that help in the prediction process.

b. Long Short-Term Memory (LSTM)

The LSTM is a recurrent neural network. With the help of it, you will find it easier to forecast time series. This is because it can memorize long-term dependencies.

c. Artificial Neural Networks (ANN)

An artificial neural network helps to model complex relationships between price inputs and outputs. Here, the algorithm mimics neural networks that are present in humans.

d. Convolutional Neural Network (CNN)

CNN is best for image processing. However, in the hybrid cryptocurrency pricing model, you can apply it to perform time-series analysis. In fact, CNN performs time-series analysis by using data as images.

Benefits of Using a Hybrid Cryptocurrency Prediction Model

By using a hybrid cryptocurrency prediction model, you can be a better crypto investor. Here are the benefits you will have as a crypto investor:

1. Emerging Trends Forecasting

A little change in the market can create some of the biggest investment trends. In fact, with manual observation, it is next to impossible to stay on top of these trends. Hence, by using AI and machine learning, you can understand trends better and take the necessary steps.

Here, with the hybrid model, you can grab investment opportunities whenever it arrives in the market. Thereby, with the help of

2. Higher Focus on Hybrid Models

With time, hybrid models are becoming more and more accurate. This is because of updates in technology and new experiments. Hence, as an investor, you can start investing in those models yourself.

In fact, many of these models will start integrating with new algorithms and other types of technologies. Thereby, it will help in forecasting better. Moreover, the predictive accuracy of these models also stays in the investment world’s forefront.

Implementing Hybrid Models

In many cases, investors successfully implemented hybrid models to bring out better price predictions. Here are two examples:

1. LSTM + Technical Indicators

There have been a lot of improvements in hybrid prediction models. For instance, experts combine LSTM networks with MACD and RSI. As a result of these integrations, there have been significant improvements in the accuracy of predictions. Hence, the results came out to be better than traditional models of analysis.

2. Ensemble Learning

Here, investors combine the ARIMA model of finance with machine learning. Hence, this model outperformed many individual models when it came to crypto price predictions. On the other hand, even experts can make price predictions despite being present in a different time horizon.

Start Your Prediction Now

With the help of a hybrid cryptocurrency prediction model, you can take your crypto price predictions to a whole new level. In fact, once you combine machine learning with analysis models, you can get accurate price predictions.

Do you have more suggestions on how to use a hybrid model? Please share your ideas and opinions in the comments section below.