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Article

Machine Learning Analytics for Blockchain-Based Financial Markets: A Confidence-Threshold Framework for Cryptocurrency Price Direction Prediction

1
Department of Theoretical and Applied Sciences, eCampus University, Via Isimbardi 10, 22060 Novedrate, CO, Italy
2
Department of Intelligent Software Systems and Technologies, School of Computer Science and Artificial Intelligence, V.N. Karazin Kharkiv National University, 4 Svobody Sq., 61022 Kharkiv, Ukraine
3
State Scientific Institution “Institute of Information, Security and Law of the National Academy of Legal Sciences of Ukraine”, 3, Pylypa Orlyka Street, 01024 Kyiv, Ukraine
4
Institute of Compliance in Financial Markets, Chicago Kent College of Law, 565 West Adams Street, Chicago, IL 60661, USA
5
Department of Economics, Hryhorii Skovoroda University in Pereiaslav, 30, Sukhomlynskу Street, 08401 Pereiaslav, Ukraine
6
Department of Post-Graduate and Doctoral Courses, State University “Kyiv Aviation Institute”, 1, Liubomyra Huzara Ave., 03058 Kyiv, Ukraine
*
Authors to whom correspondence should be addressed.
Appl. Sci. 2025, 15(20), 11145; https://doi.org/10.3390/app152011145
Submission received: 22 September 2025 / Revised: 11 October 2025 / Accepted: 13 October 2025 / Published: 17 October 2025

Featured Application

The confidence-threshold framework developed in this research presents immediate applications for cryptocurrency trading platforms, blockchain-based financial services, and decentralized finance (DeFi) protocols. Trading firms can implement the selective execution strategy to improve risk-adjusted returns while reducing exposure during high-uncertainty periods. Cryptocurrency exchanges can integrate the confidence scoring methodology to enhance market-making algorithms and provide better liquidity provisioning. DeFi protocols can utilize the framework for automated portfolio rebalancing and yield optimization strategies that adapt to varying market conditions. Institutional investors entering cryptocurrency markets can employ the approach for systematic allocation decisions that account for blockchain market volatility characteristics. The methodology’s emphasis on order book microstructure makes it particularly suitable for high-frequency trading applications where blockchain transaction transparency provides unique data advantages. Regulatory bodies can leverage the systematic risk assessment capabilities to monitor cryptocurrency market stability and identify potential systemic risks in blockchain-based financial systems. The framework’s ability to quantify prediction confidence also supports the development of risk management tools specifically designed for blockchain asset portfolios, addressing a critical need as cryptocurrency adoption expands across traditional financial institutions.

Abstract

Blockchain-based cryptocurrency markets present unique analytical challenges due to their decentralized nature, continuous operation, and extreme volatility. Traditional price prediction models often struggle with the binary trade execution problem in these markets. This study introduces a confidence-based classification framework that separates directional prediction from execution decisions in cryptocurrency trading. We develop a neural network system that processes multi-scale market data, combining daily macroeconomic indicators with a high-frequency order book microstructure. The model trains exclusively on directional movements (up versus down) and uses prediction confidence levels to determine trade execution. We evaluate the framework across 11 major cryptocurrency pairs over 12 months. Experimental results demonstrate 82.68% direction accuracy on executed trades with 151.11-basis point average net profit per trade at 11.99% market coverage. Order book features dominate predictive importance (81.3% of selected features), validating the critical role of blockchain microstructure data for short-term price prediction. The confidence-based execution strategy achieves superior risk-adjusted returns compared to traditional classification approaches while providing natural risk management capabilities through selective trade execution. These findings contribute to blockchain technology applications in financial markets by demonstrating how a decentralized market microstructure can be leveraged for systematic trading strategies. The methodology offers practical implementation guidelines for cryptocurrency algorithmic trading while advancing the understanding of machine learning applications in blockchain-based financial systems.
Keywords: blockchain technology; cryptocurrency markets; machine learning; confidence-based classification; algorithmic trading; market microstructure; neural networks; trading systems; financial prediction; decentralized markets blockchain technology; cryptocurrency markets; machine learning; confidence-based classification; algorithmic trading; market microstructure; neural networks; trading systems; financial prediction; decentralized markets

Share and Cite

MDPI and ACS Style

Kuznetsov, O.; Kostenko, O.; Klymenko, K.; Hbur, Z.; Kovalskyi, R. Machine Learning Analytics for Blockchain-Based Financial Markets: A Confidence-Threshold Framework for Cryptocurrency Price Direction Prediction. Appl. Sci. 2025, 15, 11145. https://doi.org/10.3390/app152011145

AMA Style

Kuznetsov O, Kostenko O, Klymenko K, Hbur Z, Kovalskyi R. Machine Learning Analytics for Blockchain-Based Financial Markets: A Confidence-Threshold Framework for Cryptocurrency Price Direction Prediction. Applied Sciences. 2025; 15(20):11145. https://doi.org/10.3390/app152011145

Chicago/Turabian Style

Kuznetsov, Oleksandr, Oleksii Kostenko, Kateryna Klymenko, Zoriana Hbur, and Roman Kovalskyi. 2025. "Machine Learning Analytics for Blockchain-Based Financial Markets: A Confidence-Threshold Framework for Cryptocurrency Price Direction Prediction" Applied Sciences 15, no. 20: 11145. https://doi.org/10.3390/app152011145

APA Style

Kuznetsov, O., Kostenko, O., Klymenko, K., Hbur, Z., & Kovalskyi, R. (2025). Machine Learning Analytics for Blockchain-Based Financial Markets: A Confidence-Threshold Framework for Cryptocurrency Price Direction Prediction. Applied Sciences, 15(20), 11145. https://doi.org/10.3390/app152011145

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