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README.md
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---
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tags:
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- time-series
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- forecasting
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- cryptocurrency
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- LSTM
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- deep-learning
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datasets:
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- HistoricalCryptoData
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license: mit
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---
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# CryptocurrencyPriceForecaster
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## Overview
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This model is a deep learning-based **Long Short-Term Memory (LSTM)** network designed for multivariate time series forecasting of cryptocurrency prices (specifically, the next 7-day closing price of BTC/USD). It utilizes historical price data and technical indicators as input features.
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## Model Architecture
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The architecture is a classic sequence-to-sequence structure implemented with LSTMs, optimized for handling temporal dependencies.
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1. **Input Layer:** Takes a sequence of the last **60 time steps** (e.g., 60 days) of 7 features (Open, High, Low, Close, Volume, Moving_Avg_14, RSI_14).
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2. **LSTM Layers:** **3 stacked LSTM layers** with a hidden size of 256 neurons, incorporating dropout (0.2) to prevent overfitting. LSTMs are crucial for capturing long-term dependencies in price movements.
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3. **Dense Output Layer:** A final fully connected layer projects the output of the LSTM layers to the desired **1-day ahead closing price prediction**.
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4. **Training:** Trained using the Mean Squared Error (MSE) loss function.
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## Intended Use
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This model is strictly for **research and experimental financial modeling**.
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* **Prediction:** Forecasting the next day's closing price for BTC/USD based on a 60-day window.
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* **Feature Importance Analysis:** Studying the predictive power of different technical indicators (RSI, Moving Averages).
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* **Simulated Trading:** Use in a paper trading environment to test the viability of model-driven trading signals.
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## Limitations
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* **Not Financial Advice:** This model is a statistical tool and its predictions should **NOT** be used as the sole basis for real financial investment decisions. Cryptocurrency markets are highly volatile.
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* **Exogenous Factors:** The model only uses technical (price/volume) data. It does not account for sudden, unpredictable external events (e.g., regulatory changes, major exchange hacks, macroeconomic shocks) which are often primary drivers of crypto volatility.
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* **Prediction Horizon:** Optimized for short-term (1-day) forecasting. Accuracy degrades substantially beyond this horizon.
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* **Stationarity:** The input data requires careful normalization (`MinMaxScaler` used) and handling of non-stationarity to ensure reliable training.
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