What's fundamental analysis in crypto?

crypto and NFT fundamental analysis

This article focuses on fundamental analysis of the cryptocurrency market and how investors can use it to better predict trends and thus improve their cryptocurrency investing experience.

The best crypto. and NFT analysis?

We'll walk you through how to analyze cryptocurrencies using fundamental analysis, including key factors to consider, and see how cryptocurrency analysis differs from traditional asset analysis. With that in mind, let’s take a look at the three most popular types of cryptocurrency analysis; fundamental, technical, and on-chain analysis. In one of our cryptocurrency investing courses, we introduced you to the fundamentals of digital assets and the basics of technical analysis.

So you will understand why it is more than important for your NFT project to have a solid and well-documented foundation so that future investors who apply fundamental analysis can fall in love with your project and spend several hundred ETH. Their analysis will also go through your network statistics, so don't neglect your Twitter and Discord. Having a huge number of quality followers on Twitter is already 40% of the job.

In this article, we will look at the broader factors that can influence sentiment in the cryptocurrency markets and look at some of the points to consider when investing in cryptocurrencies.

What are trader and investors doing?

Cryptocurrency traders and investors use a wide range of tools, analytics and indicators to predict the price movements of digital assets. Technical analysis, on the other hand, is a trading method that evaluates the value of an investment based on statistics and trends in asset price movements and trading volumes. Information about the asset's current trading price, historical price data, trading volume, and liquidity are all parameters commonly associated with technical analysis. This analytical approach is based on the use of internal and external data, mainly those that describe the condition of an asset and its potential. 

Know the real value of a project!

Cryptocurrency fundamental analysis can analyze the real value of a cryptocurrency by evaluating its financial data such as market cap, trading volume and liquidity, and current supply. To see if a cryptocurrency has an intrinsic value that is not reflected in its current market price, you can use a fundamental analysis strategy, which is the act of researching and evaluating investments to predict their future value. The purpose of fundamental analysis is to find the intrinsic value of assets, which can be very different from the market price.

Investors are king :

Although the price of cryptocurrencies is 100% determined by the market, investors (especially beginners) can choose which cryptocurrencies to buy through fundamental analysis. In the fundamental analysis of cryptocurrencies, although the approach is similar to that used in traditional markets, it is not possible to use proven tools to value crypto assets. The question is what tools can be used to evaluate crypto assets from a fundamental point of view. 

Before invest in a NFT collection or crypto-project, do this :

Before trading or investing in a cryptocurrency, investors do some analysis to determine the suitability of this asset. Before investing in any cryptocurrency, you must remember that the valuation of a cryptocurrency is significantly different from the valuation of conventional financial assets such as stocks because there are no balance sheets.

The financial evaluation of cryptocurrencies and NFTs involves understanding the terms and conditions for trading assets, including their liquidity, environmental factors, and market reaction. Developing a strong and healthy cryptocurrency trading or investment strategy requires an understanding of both fundamental and technical analysis, each focusing on different indicators.

As you can see, fundamental and technical analysis also applies to the cryptocurrency market, albeit with some peculiarities. The reality is that although they are completely different things, the analysis of technical data and fundamentals is equally important in investing and trading. Although fundamental analysis and technical analysis are different, most traders prefer to use a combination of the two methods, as each method has its pros and cons.

The difference between technical and fundamental analysis :

Fundamental analysis encourages investors to look for the intrinsic value of a company, while technical analysis focuses on methods of predicting asset price behavior.

  1. Fundamental analysis looks at the big picture and considers as many factors as possible, while technical analysis focuses on price action and historical volume to help investors identify short-term trading opportunities.
  2. Technical analysis is based on the belief that past price movements and market activity for a given asset can be used as a valuable source of information in determining the future price path of that asset. Fundamental analysts focus on a company's intrinsic value and measure the company's ability to increase the company's profits and assets, while technical analysts focus only on the asset's price history and trading volume.
Rather than setting entry and exit points, fundamental analysis seeks to understand the value of an asset so that traders can have a long-term view of the market. There are many ways to define fundamental analysis, but when broken down into its simplest terms, it is the study of the underlying value of financial assets using a variety of qualitative and quantitative data points. Fundamental analysis may aid long-term investment decisions by helping traders determine the value of cryptocurrencies based on the extensive available information.