Even though fundamental analysis in cryptocurrency trading has always helped in determining the general trend of the market, it's still a vast ocean of information that can confuse the best of traders.
What makes matters worse is the fact that this information can be interpreted differently. Meaning that most of it is subjective.
On top of that, while some data can be quantifiable, other types of information are mostly qualitative. This makes gauging their effect on the asset in question near impossible.
However, not all hope is lost.
There are many models of fundamental analysis that try to make sense of it all. Like the Stock 2 Flow model. Which is gaining in popularity among the crypto market players for its linearity and the baseline it provides.
Other models have their advantages and disadvantages, according to the situation. However, it never hurts to start things off with a check-list. This will help eliminate obvious bad choices. On top of that, it will make projects that hold the most potential for growth pop up fast. Thus, making you more efficient.
For this check-list, you can give marks to each aspect of the cryptocurrency. Each component is graded on a scale from 0 to 3. 1 is when the coin is performing badly. 3 is when it does an excellent job. 0 is when the section is none existent.
The elements I have considered in making this check-list are the result of a research on the three main aspects of fundamental analysis: On-chain analysis, project analysis and financial analysis.
It's the culmination of a three-part series, entitled "Cryptocurrency Trading with Fundamental Analysis", that I published recently on my blog. You can find the link to it in the sources below.
Also, I'd like to add that fundamental analysis is by no mean limited to only these three sections. The elements that must go into such analysis are, by nature, largely unpredictable. You can never know for certain what would be the new thing that's going to influence the market. This is why some big corporations can dedicate a whole floor just for fundamentals.
So be careful when trading on these waters. And always remember that fundamental analysis should always be combined other types of analyses. This will add more layer of protection against risk. It will also take many, many losses out of your trading. Which is exactly what you want, if I'm not mistaken.
Keep that in mind. Never focus on the profit itself. Be more attentive to learning new techniques to add to your arsenal.
