Exploring the Effectiveness of Adding Sentiment Analysis and Trends into Random Forest Machine Learning Algorithm to Predict Bitcoin Price Action

Abstract

Cryptocurrencies have recently become popular among many people, young and old, with various backgrounds. The popularity of cryptocurrency shines due to several things, one of which is Bitcoin, the largest cryptocurrency ever to exist. However, even though Bitcoin is well-known and considered as the largest cryptocurrency, Bitcoin still experienced major price fluctuations over the years, seen in daily trades and yearly valuations. It is because in this digital era, the whole market can be said to be vulnerable because news and social media posts can easily be accessed on the internet. Therefore, it can create sentiments and trends across society. Due to the possibility that sentiment and trends can influence the volatility movements of cryptocurrencies such as Bitcoin, this research wants to see whether the use of sentiment analysis and trends in one of Machine Learning algorithms, namely Random Forest, can predict the Bitcoin price action well.