DecoKAN: Interpretable Decomposition for Forecasting Cryptocurrency Market Dynamics
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arXiv
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| Main Authors: | , , , , , |
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| Format: | Preprint |
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2025
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| _version_ | 1866912785278959616 |
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| author | Gao, Yuan Dong, Zhenguo Wang, Xuelong Wang, Zhiqiang Zhang, Yong Wang, Shaofan |
| author_facet | Gao, Yuan Dong, Zhenguo Wang, Xuelong Wang, Zhiqiang Zhang, Yong Wang, Shaofan |
| contents | Accurate and interpretable forecasting of multivariate time series is crucial for understanding the complex dynamics of cryptocurrency markets in digital asset systems. Advanced deep learning methodologies, particularly Transformer-based and MLP-based architectures, have achieved competitive predictive performance in cryptocurrency forecasting tasks. However, cryptocurrency data is inherently composed of long-term socio-economic trends and local high-frequency speculative oscillations. Existing deep learning-based 'black-box' models fail to effectively decouple these composite dynamics or provide the interpretability needed for trustworthy financial decision-making. To overcome these limitations, we propose DecoKAN, an interpretable forecasting framework that integrates multi-level Discrete Wavelet Transform (DWT) for decoupling and hierarchical signal decomposition with Kolmogorov-Arnold Network (KAN) mixers for transparent and interpretable nonlinear modeling. The DWT component decomposes complex cryptocurrency time series into distinct frequency components, enabling frequency-specific analysis, while KAN mixers provide intrinsically interpretable spline-based mappings within each decomposed subseries. Furthermore, interpretability is enhanced through a symbolic analysis pipeline involving sparsification, pruning, and symbolization, which produces concise analytical expressions offering symbolic representations of the learned patterns. Extensive experiments demonstrate that DecoKAN achieves the lowest average Mean Squared Error on all tested real-world cryptocurrency datasets (BTC, ETH, XMR), consistently outperforming a comprehensive suite of competitive state-of-the-art baselines. These results validate DecoKAN's potential to bridge the gap between predictive accuracy and model transparency, advancing trustworthy decision support within complex cryptocurrency markets. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2512_20028 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | DecoKAN: Interpretable Decomposition for Forecasting Cryptocurrency Market Dynamics Gao, Yuan Dong, Zhenguo Wang, Xuelong Wang, Zhiqiang Zhang, Yong Wang, Shaofan Machine Learning Artificial Intelligence Accurate and interpretable forecasting of multivariate time series is crucial for understanding the complex dynamics of cryptocurrency markets in digital asset systems. Advanced deep learning methodologies, particularly Transformer-based and MLP-based architectures, have achieved competitive predictive performance in cryptocurrency forecasting tasks. However, cryptocurrency data is inherently composed of long-term socio-economic trends and local high-frequency speculative oscillations. Existing deep learning-based 'black-box' models fail to effectively decouple these composite dynamics or provide the interpretability needed for trustworthy financial decision-making. To overcome these limitations, we propose DecoKAN, an interpretable forecasting framework that integrates multi-level Discrete Wavelet Transform (DWT) for decoupling and hierarchical signal decomposition with Kolmogorov-Arnold Network (KAN) mixers for transparent and interpretable nonlinear modeling. The DWT component decomposes complex cryptocurrency time series into distinct frequency components, enabling frequency-specific analysis, while KAN mixers provide intrinsically interpretable spline-based mappings within each decomposed subseries. Furthermore, interpretability is enhanced through a symbolic analysis pipeline involving sparsification, pruning, and symbolization, which produces concise analytical expressions offering symbolic representations of the learned patterns. Extensive experiments demonstrate that DecoKAN achieves the lowest average Mean Squared Error on all tested real-world cryptocurrency datasets (BTC, ETH, XMR), consistently outperforming a comprehensive suite of competitive state-of-the-art baselines. These results validate DecoKAN's potential to bridge the gap between predictive accuracy and model transparency, advancing trustworthy decision support within complex cryptocurrency markets. |
| title | DecoKAN: Interpretable Decomposition for Forecasting Cryptocurrency Market Dynamics |
| topic | Machine Learning Artificial Intelligence |
| url | https://arxiv.org/abs/2512.20028 |