Fundamental Analysis vs Technical Analysis. All you need to know

By Jesyan | Jessica | 6 Jul 2020


There are two methods of analyzing/researching a project and they are Fundamental analysis(FA) and Technical analysis (TA). Both methods are usually used at the same time but some investors and traders lean towards either FA or TA depending on preference.

  Fundamental Analysis

You could say fundamental analysis is the process of assessing a coin or asset in terms of being currently undervalued or overvalued by focusing on the core aspects of the project. I'll explain,

Fundamental analysis would look at the project, it’s use case, partnerships, upcoming news, development, etc, and draw a conclusion if a coin is underpriced or overpriced.

For example:  if a coin called "poop coin" is worth $1000 on the market and all it does is help you pay for toilet paper but hasn’t been developed in 5 years, doesn’t have any big partnerships, doesn’t bring out updates, and if there are many other coins that are doing exactly what it does, then you can as well say it’s overpriced and you wouldn’t be buying at the price because it has no reason to go up.

on the other hand

If a coin called "space coin", which is made to be used by astronauts in space, is being built by Microsoft, has a partnership with world bank, has updates every week and is getting a coinbase listing in 2 weeks, then you can say it's a good project to invest in since you know it's has a very qualified team and big partnerships.

This is how fundamental analysis works. You check what the coin does, you see when it's getting listed on exchanges, you see what developments are being made, you see what partnerships they have and then you make an informed decision. Fundamental analysis doesn't use charts, just information.

  Technical Analysis

Technical analysis is the process of using charts and indicators to gauge the markets and determine if a coin might go up or down.

Technical analysis uses tools like the Moving Average, Fibonacci levels, Bollinger bands, MacD, RSI, and other indicators.

Technical analysis is important because it is used by institutional investors like banks,  hedge funds, and big Governments. Learning technical analysis helps you determine what price levels big players might be buying or selling coins.

In conclusion, you can say we use FA to select which coins to invest in and we use TA to know when to buy or sell the coins we've selected.

I hope you found this post useful? If you did, subscribe and upvote for more posts like this. If you have any questions let me know in the comments below. Cheers!


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