Cryptocurrency Price Forecasting Implementing Sentiment Analysis during the Russian-Ukrainian War

Abstract

Abstract Sentiment analysis is a powerful tool for extracting valuable insights from social media data. In this paper, more than one million tweets spanning three months (March, June, and December 2022) regarding three cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB) during the Russian-Ukrainian War are considered. Two models, a convolutional neural network with long short-term memory (CNN-LSTM) and a support vector machine (SVM) with GloVe and TF-IDF features, are trained on a labeled dataset of more than fifty thousand tweets about Bitcoin labeled as (positive, negative, and neutral). A pretrained model (Pysentimento) for sentiment analysis is also employed to compare the performances of the three models. The models are tested on the labeled dataset and then evaluated on the unlabeled tweets, revealing that Pysentimento's level of accuracy outperforms the other two models. Google Trends, along with the opening and closing prices, and the volume of the three cryptocurrencies, in addition to the results of Pysentimento sentiment classification, are employed to apply the Pearson correlation coefficient and conduct price prediction analysis using the SARIMA model. It is found that Bitcoin may appeal to those seeking stability and a known record of accomplishment, while Binance Coin and Ethereum may attract investors looking for more diverse opportunities. Sentiment analysis using machine learning is found to provide invaluable information for cryptocurrency price forecasting and trading strategies, especially in the context of geopolitical events and market volatility.