informed investment decisions

Performing a professional fundamental analysis of a cryptocurrency requires a lot of time and patience. Among others, the current situation of the company is also important. This is why most of the investors use studies prepared by brokerage houses, exchanges, and investment banks.

daily transaction volume

If so, what is their stake in the company and how much influence do they have? Ultimately, the answers to all these questions will affect your investment. SwissBorg’s hourly asset analysis tool automatically combines several factors to provide a baseline analysis of a cryptocurrency’s value.

Fundamental analysis looks at the fundamentals of an asset, or in other words, every aspect of an asset that contributes to its overall value. Shiba Inu is an Ethereum-based altcoin that features the Shiba Inu hunting dog as its mascot and is considered an alternative to Dogecoin. A cryptocurrency is a digital or virtual currency that uses cryptography and is difficult to counterfeit.

Market Capitalization Analysis

Cryptocurrencies are typically created by a team of founders and software developers that help create the solution to a problem. To better understand how a project could perform, you should research the professional experience of the team running the project. Knowing the basics of investment and how cryptocurrencies work can give a better idea. Maintaining your risk management practices and allocating appropriately lets you move in and out of a position as the market changes.


Crypto fundamental analysis involves taking a deep dive into the available information about a financial asset. For instance, you might look at its use cases, the number of people using it, or the team behind the project. So, there it is — 10 steps for sound fundamental analysis to help evaluate the profit potential of any asset before any investing or trading. Social media, for instance, can have a significant impact on a crypto asset’s price action. Memecoins such as Dogecoin and Shiba Inu skyrocketed in price due, in part, to social media excitement. Fundamental analysis is the process of finding the intrinsic value of an asset, with the goal of determining whether the asset is overvalued or undervalued.

If you were to launch a cryptocurrency tomorrow, and Google also launched one on the same day, it’s likely Google’s would gain more traction. In 2017 it was very trendy in crypto to rebrand a token and give it a new name and logo. Fundamental analysis is by no means exclusive to cryptocurrency – it’s ingrained in other types of trading. Cryptocurrencies are digital currencies that are not controlled or supported by any central authority like banks. Instead, transactions and ownership data are stored through distributed ledger technology, such as a blockchain. Many cryptocurrencies allow the minting of new tokens, and the maximum supply is the maximum amount of tokens that will ever be minted.

Marketing and community

These signals are based on technical analysis and are designed to help traders and investors identify potential trading opportunities in the cryptocurrency market. Another factor when evaluating a project’s metrics is understanding who is driving usage or transactions – are they from institutional investors, retail investors, or actual users ? Information about public sentiment can be gauged from the activity of the community and social media feeds across all channels. With this data in hand, you can obtain better insight into how the project works and whether it has good long-term potential or not.

I asked ChatGPT XRP’s price prediction – Is the chatbot bullish? – AMBCrypto News

I asked ChatGPT XRP’s price prediction – Is the chatbot bullish?.

Posted: Sun, 02 Apr 2023 07:00:00 GMT [source]

However, you can also leverage to trade and invest in digital assets and cryptocurrencies. The pursuit to find the coin’s intrinsic value is initiated with a broader approach and then narrowed down. Automated Chart Patterns provide users with a list of commonly used chart patterns such as head and shoulders, triangles, flags, and wedges, along with detailed explanations and illustrations. It also provides users with a list of cryptocurrencies that are currently exhibiting specific chart patterns, along with relevant technical indicators and other market data.

Read the blueprint of the project: The Whitepaper

Since many coins like Bitcoin have a known, limited supply and no new sources, investors often use them like gold – a store of long-term value. Blockchains use different types of supply mechanisms that can have a considerable impact on the future market trajectory of a token. Developers often burn tokens to reduce the current circulating supply. Revenues refers to the value of any transaction fees or other value generated by a blockchain.

  • The S&P Global Research Council has identified six interconnected themes that have the greatest potential for large-scale disruption in the coming years.
  • Now that you know the objectives of this strategy, let’s learn how to do it.
  • Consider any upcoming events, such as a hard fork or the launch of a new product which could potentially influence the token’s price movement.
  • You will often find situations where fundamental analysis plays out just as you would expect.
  • One way to do this is by looking at current project metrics and on-chain data and comparing them to previous markets that have similar characteristics as the current market .

Also, there are instances where the average crypto fundamental value analysis amount of a certain token is higher than other tokens. As compared within the table above the number of transactions and the average amount of transactions are rarely considered while laying down the true potential of a token. When they say ’Don’t judge a book by its cover’ that’s the phrase one might tell after diving deep into the sea of crypto markets. Now that we have read about analyzing the fundamentals of a crypto asset and its various indicators of it. Here’s how this analysis acts as a folio to the indicator to assess the crypto’s value with real-time metrics. Some crypto projects may be orchestrated by a team, while some may not.

The bid-ask spread is the gap between the highest bid and the lowest ask. Fundamental analysis first emerged in 1934 with the publication of “Security Analysis,” a book about investing. In this text, the authors argued that investors should look at all of the business fundamentals surrounding a security before investing in it.

The feedback from all market participants, however, is that the crypto world is volatile. Understanding the financial metrics of a crypto project is another critical component of fundamental analysis. Financial metrics refer to the quantitative numbers or data behind a crypto project, assessing the asset’s liquidity profile and supply mechanisms to make informed investment decisions.

  • Being able to separate the market price from the „true” value of a network is an excellent skill to have when trading.
  • For example, increasing monetary bases of fiat currencies is commonly a precursor of inflation.
  • Fundamental analysis works off the idea that the market could undervalue or overvalue an asset at first.

Prices are rising without there being a matched increase in the underlying value. In the opposite case, a coin or token’s price may stay stable while daily transaction volume increases. With so many sources for high-quality data and metrics, you have easy access to everything you need to perform fundamental analysis on cryptocurrencies. The key is separating the signal from the noise; we hope this article has helped you do that.

Technical analysis for cryptocurrency

Invest in projects that create useful tokens; otherwise, the token may not have utility in the marketplace. For information on how to trade Bitcoin Crypto Coin refer to our How to Trade Bitcoin Crypto Coin guide. You can also try Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities. Glassnode is a subscription-based service that offers a wide array of on-chain metrics. A free service with limited options is also available for amateur/casual investors.

transaction volume

This can include countries’ sentiment towards the currency, how many people are using the digital cash every day, or even the team behind the project. The NVT ratio assumes that the more money moves around the blockchain, the more value it has. With this assumption, analysts can determine if the coin is currently a buy or sell.

Bitcoin Exchange Flows Turn Negative – Warning Sign BTC Price … – Cryptonews

Bitcoin Exchange Flows Turn Negative – Warning Sign BTC Price ….

Posted: Wed, 05 Apr 2023 18:32:00 GMT [source]

There are tens of thousands of cryptocurrencies, and unfortunately, some of them are scams designed to get the founders rich. Researching the reputation of the team and leadership of a cryptocurrency can help investors understand if the crypto project is reputable or not. Hopefully, this article will have helped you understand some of the factors to consider before entering or exiting positions with crypto assets. Glassnode Studio offers a dashboard displaying a wide range of on-chain metrics and data. However, the amount of free on-chain data it offers is suitable for amateur investors and quite in-depth.

Non-fungible tokens are digital assets that derive value from their scarcity and uniqueness. While a project may have great fundamentals, ask yourself whether it has to use blockchain and have its own cryptocurrency. If it already has a lot of users that will now use the cryptocurrency in question, that could contribute to value.

Bitcoin doesn’t have much of a focus on project metrics, as it lacks a team and tokenomics for the future. The metrics relating to market cap, token supply, transaction count, active addresses, and fees are still very much important to look at. These metrics will help you vet projects you potentially want to invest in or trade. Starting with project metrics, looking at the team behind a project often shows whether they have the experience or commitment to see a project through to success. When it comes to financial metrics, understanding the token supply and the potential it has on the market cap in the future can be greatly rewarding. This framework uses relative value to make directional decisions based on following the major reserve crypto asset which is bitcoin.