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We've already taken a look at how Fundamental Analysis plays a role in bull markets (spoiler: it matters!). As a reminder, Fundamental analysis aims to arrive at the intrinsic or fair value of an asset versus the price. In traditional investing, investors buy equity in a company, ensuring that if the company’s value grows, so too does their investment. This is not the case in crypto assets. Crypto assets are not shares in a company. A true crypto-asset should not even have a company. Value accrual and value capture are not one and the same and this difference is at the heart of many struggling token projects. This is, in part, what separates Bitcoin from the ICOs and VC-backed coins of the world, but that is a topic for another post.
This current bull market arguably began after the March 2020 Covid crash last year. As the chart below illustrates, CryptoEQ's higher rated assets wound up returning a higher ROI than lower rated assets in 2020. This is encouraging to see even during all out mania phases. We look forwarded to updating this chart (with even more assets!) at the end of 2021.
However, undeniably, a project's fundamentals are not the only factor. Price and momentum play a huge role. Investors that bought BTC above $65k are probably not quite as happy seeing as it quickly went back down to the $30k mid year and low $60ks now. Could these users have known that? No. No one does for sure. But...... You can use recent price action and momentum indicators to help get an idea (probability) that a market is overheated or oversold. Finding good entry (and exit points) are critical for helping investors not get rekt but also, giving them confidence and conviction to HODL and stay in the market!
Investing is complex, and trading is even harder. It can take years to truly master and 90%+ will not make a profit over the long run. Everyone feels like a genius now because everything just goes up. That won't last forever. That's why CryptoEQ's #TradingView Signal is so valuable. Finding advantageous entry points can save you months/years of recouping investments.
Take a look at the image below. This is Bitcoin price action just over the last couple months. The indicator has given tremendous signal even during choppy periods.
And here's the same signal but on the weekly scale looking at Bitcoin over years. Red triangle = overbought. Green triangle= oversold. These Green signals highlight awesome entry points while the red have captured inter-cycle pullbacks with good success. This signals makes understanding the market (and market fluctuations) much, much easier for the average person!
Our script directly integrates into your TradingView charts to signal several digital assets' best entry and exit points. You can see from the image just how easy it is to know when you might want to pull back or when you might want to double down and buy.
Pro-tip: set up your alerts on our CryptoEQ.io/dashboard to get a heads-up for when to check your TradingView Signals.
