Introduction to Fundamental Analysis in Cryptocurrencies

In this article, I will briefly talk about what fundamental analysis is in cryptocurrencies, the importance of fundamental analysis, and which steps we should look at while doing fundamental analysis.

Fundamental analysis in cryptocurrencies is when an investor tries to predict its future price by looking at the key characteristics and performance of the cryptocurrency in question.

The most important factor that distinguishes fundamental analysis from technical analysis is that it is more effective for long-term investment plans. In addition, since there is not enough data for technical analysis in projects entering the cryptocurrency industry, investment decisions can only be made with fundamental analysis.

Some specific steps are taken into account when performing fundamental analysis.

Step 1-Understanding the purpose of the project:

It is important to understand the project and technology underlying cryptocurrency, especially how the project works, its functionality and the value it creates. A good project will have high user adoption and growth.

Step 2-Exploring the capabilities of the team:

It is important to learn about the nature, experience and background of the team behind the project. A competent team is an important factor for project success.

Step 3-Monitoring user adoption:

Project adoption, increasing number of users, community activity and other adoption indicators will affect the success and price performance of the project.

Step 4-Assess market competition:

It is important to evaluate whether the project can compete with similar projects. Analyzing technologies and communities of competing projects is a factor influencing price performance.

Step 5-Following new developments:

It is important to follow new developments that may affect the price of the project. For example, if a project introduces a new product or service, forms a major partnership, or faces regulatory action, it can affect price performance.

Step 6-Analyzing financial data:

The financial data of the project, eg market cap, price, supply and demand, is part of the fundamental analysis. Analysis of this data can help an investor make a price prediction.

In conclusion, fundamental analysis is an active process. You can give a grade to a project that enters the market at first glance by following the steps above. However, if you have decided to invest in the project, it is very important to keep up with the developments.