Deep hybrid models for bitcoin forecasting: EMD, CEEMDAN,and LSTM in comparison

Abstract

In this study, an artificial neural network (ANN) was developed to forecast Bitcoin prices using one of the most successful deep learning architectures for time series analysis: long short-term memory (LSTM) networks. This model was enhanced with a signal processing layer that reduces the impact of the instrument’s high volatility on prediction accuracy by applying two signal decomposition techniques: empirical mode decomposition (EMD) and complete ensemble empirical mode decomposition with adaptive noise (CEEMDAN). This study is motivated by the major fluctuations in Bitcoin prices, which make precise forecasting difficult but crucial for experts and investors. This findings demonstrate that forecasting performance improves when decomposition techniques are used. In particular, compared to the conventional LSTM and EMD-LSTM models, the CEEMDAN-LSTM model achieved the highest accuracy, with a mean absolute error (MAE) of 167.837 and a root mean square error (RMSE) of 255.673, outperforming both EMD-LSTM (MAE =168.785, RMSE =256.042) and the standard LSTM (MAE =169.516, RMSE=256.225). The combination of CEEMDAN and LSTM results in a more reliable model that can accurately capture short-term fluctuations in Bitcoin prices.