Predicting Altcoin Prices in Cryptocurrency Bear Market

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, which are more speculative and less stable than Bitcoin. This study 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 evaluates how the dominance of Bitcoin and Ethereum shapes altcoin price movements. Four altcoins—Zcash (ZEC), Litecoin (LTC), Ripple (XRP), and Dash (DASH)—are analyzed using machine learning algorithms such as Classification and Regression Trees, Random Forests, and Extreme Gradient Boosting (XGBoost). The results reveal that XGBoost delivers superior predictive performance and highlight that Bitcoin (BTC) and Ethereum (ETH) 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.