Cryptocurrency markets act in correlation with traditional markets more than ever before. We've seen good evidence of this in the last six months. This reminded you once again how important Fundamental Analysis is.
So what is fundamental analysis… ? How to… ? How important…? In this article, we will try to find answers to these questions …
If you're ready, Let's Start …
What is Fundamental Analysis…?
It is an approach used by investors to determine the "true value" of a cryptocurrency. The main purpose is to determine whether a cryptocurrency is overvalued or undervalued by looking at a multitude of internal and external factors. Investors then use this information to strategically enter or exit positions.
Fundamental Analysis is one of the issues that must be addressed before trading cryptocurrencies. Fundamental analysis actually gives an idea to the investor about how manipulation and speculation in the market will affect the cryptocurrency and how to act. This subject, which is more important than technical analysis, is a subject that requires attention, research and experience rather than education.
How Do We Do Fundamental Analysis … ?
Technical analysis alone is not enough when analyzing any cryptocurrency. Because one of the factors affecting the mobility of prices is the news in the press, the tweets of big investors about crypto money or the current information and news published by crypto money founders about their projects also direct the prices. Basically, while doing fundamental analysis in cryptocurrencies,
issues to be considered;
Economic reasons, Political competition in the world, Industry issues, Competition terms, Financial structure of the project, Financial structure and efficiency, Distribution channels, Management Skill
All reasons are effective reasons for the prices of cryptocurrencies. This is exactly why investors do Fundamental Analysis. It is to act by following the movements that may occur in the future by commenting on factors such as news, competition conditions, management skills.
The first thing to consider when performing Fundamental Analysis is to collect real information about cryptocurrencies. After collecting this information, as a result of all the data collected, the real value of the cryptocurrency is tried to be found. Sometimes there may be extreme increases in cryptocurrencies and these can be instantaneous. Fundamental analysis gives very important information in such cases. It is evaluated whether the reason for the rise of the cryptocurrency is real or a fake rise, that is, instant "pump". Accordingly, it is understood what the real value is and a decision is made whether to invest or not.
Economic factors are the most important factor in the movement or regression of the market. For example, the sudden rise or fall of a cryptocurrency may depend on economic factors, but it should be known that the instantaneous occurrence does not reflect the true value of the cryptocurrency. In this case, it is definitely not right to make an investment decision by relying only on fundamental analysis. Expert traders prefer to do technical analysis in the face of such movements because technical analysis gives more precise results than fundamental analysis.
Just Fundamental Analysis… ?
In order to understand cryptocurrencies and make investment decisions accordingly, it is not correct to only rely on fundamental analysis. Technical analysis is a complementary factor to Fundamental Analysis. It helps you when to enter the cryptocurrency you decide to invest or when to exit the cryptocurrency you have invested.
What Is Considered While Performing Fundamental Analysis?
Economic Analysis; Examining the general situation of the economy and its effects on prices (every data announced by the FED and interest rate decisions...)
Sector Analysis; It enables the selection of the most suitable and advantageous sector according to the information and data according to the results we have obtained through the economic analysis, and then its in-depth examination (For the year 2022, Metaversa stands out as the shining sector ... )
Project analysis: Examining the status of the investors, communities and supporters of the operating projects (Which fund companies have investments, community size, … )
Cryptocurrency analysis; Finally, it presents the true value of the cryptocurrency with the resulting data.
My Last Words; When investing in the cryptocurrency markets, you need to answer two questions … First Which cryptocurrency should I buy … ?, Second When should I buy … ? I tried to convey the answers to these two questions with the main headings. I hope my article has piqued your interest. Do not rush to invest … Stay away from leveraged transactions …
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