A New Study by Yoon Lee Investigates Factors Influencing Altcoin Price Volatility during Bear Markets
New research by Turner College MIS professor Yoon Lee points out that the cryptocurrency market has experienced substantial growth in recent years, driven by increased capital liquidity and speculative investment. However, its volatility has led to significant financial losses for many investors, particularly in Altcoins. The new study by Lee and his co-authors Chulhwan Chris Bang of Georgia Southern University, Donghyup Woo of the University of Pittsburgh — Greensburg, and Fauziya Ado Yakasai of Michigan State University investigates the factors influencing Altcoin price volatility during bear markets, with a focus on the roles of dominant cryptocurrencies like Bitcoin and Ethereum and sentiment derived from Reddit discussions. Grounded in Dow Theory and spillover effect, the research, which is set to appear in a future issue of Information Systems Frontiers, evaluates how the dominance of Bitcoin and Ethereum shapes Altcoin price movements. Four Altcoins — Zcash, Litecoin, Ripple, and Dash — are analyzed using machine learning algorithms, including Neural Networks, Classification and Regression Trees, Random Forests, and Extreme Gradient Boosting (XGBoost). The results reveal that XGBoost delivers superior predictive performance and highlight that Bitcoin and Ethereum price fluctuations exert a stronger influence on Altcoin prices than sentiment. These findings provide valuable insights for investors and suggest integrating machine learning-based predictive models into financial decision-making systems to enhance risk management and market forecasting.
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