Predicting and modelling top 5 cryptocurrencies

Abstract

  As an asset type that is changing quickly, cryptocurrencies are very volatile, which can be both good and bad for buyers. We will be looking at how volatile Bitcoin, Ethereum, Tether, Ripple, and Litecoin will be from October 2019 to October 2024 and trying to model and predict these changes. The study uses the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model to look for trends of how volatile and stable these cryptocurrencies are. The data came from Yahoo Finance, and the modelling was done   with R software.

  According to the results, Tether and Ripple are the most stable. They are not very sensitive to short-term market events (alpha1) and their volatility stays high over time (beta1). Bitcoin and Litecoin, on the other hand, are less volatile, but they react more strongly to short-term changes in the market. Ethereum is more stable than Tether and Ripple in the short term, but it reacts more quickly to changes in the market.

  The results show that Tether and Ripple are the most safe cryptocurrencies for buyers who want their money to stay put. Bitcoin and Litecoin, on the other hand, may offer higher returns but come with more risk because of how volatile they are. This study is helpful for buyers who want to understand how the complicated cryptocurrency markets work.