How to do fundamental analysis of cryptocurrency

The core purpose of trading is to profit, no matter the trading style, trading instruments, method of analysis, or even the different market types. Trading is an age-long concept, where investors and speculators alike seek to profit over a specific duration of time at for a given return on investment ROI. The financial market deals exclusively with financial instruments; it refers broadly to any marketplace where securities trading occurs, including the stock market, bond market, forex market, options, cryptocurrencies, and derivatives market. The financial market activities are typically short-term, where traders enter and exit trade over a short period with specific targets in mind. The short term here could range from several days to a few years.

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Content:

• Why Bitcoin Fundamental Analysis Isn’t Always Flawless
• Learn Crypto and Blockchain
• Technical Analysis Explained: Elementary Concepts In Trading Cryptocurrency
• Fundamental Analysis For Cryptocurrencies: The Definitive Guide
• How to perform crypto fundamental analysis
• Introduction to Technical Analysis

WATCH RELATED VIDEO: Fundamental Analysis of Cryptocurrencies

Why Bitcoin Fundamental Analysis Isn’t Always Flawless

Keeping up to date and staying informed in crypto can be exceedingly difficult. Crypto never sleeps, so information is extremely time-sensitive and can come from many different sources you might not expect. Among other techniques, fundamental analysis is key to staying on top of the latest happenings in the crypto space. But what is fundamental analysis for cryptocurrency? The average crypto trader spends a good portion of their day analyzing charts and patterns, waiting for trading signals, and buying and selling opportunities.

Technical analysis is a key tool in observing market behavior in real-time and making judgments based on statistical probabilities. Before delving into the specifics of fundamental analysis, you should have a solid foundation to start from.

Specifically, Ivan on Tech Academy provides all the basic — and advanced — education you need to make it in the cryptocurrency industry. Let Ivan on Tech Academy be your starting-off point in the crypto sector, just as it has been for thousands of others, and enroll today! So, what is fundamental analysis all about?

This could include things like the use cases for the project, the team behind it, or the community supporting it. When we zoom out for a moment, we gain a greater perspective of the cryptocurrency markets and the blockchain industry, allowing us to consider some of the macro factors that can shape the sector, and the impact of social, economic, and political discourse. In times of crisis, people need a way to ensure that their wealth is safe and secure. A crisis can also accelerate technological innovation and encourage governments to experiment with new technologies earlier than planned to prevent a crisis from worsening.

While global crises can be devastating, it is often during these times that some of the biggest developments are made in society and technology. When social norms are broken, people need to look at new ideas to re-establish the status quo. Catastrophic global events can often be a catalyst for new developments in many sectors, and as blockchain is present sector-wide, the industry can be affected by socio-economic tensions, civil unrest, and pandemics.

When an event takes place that affects the entire global economy, this is a major consideration when implementing fundamental analysis for cryptocurrency. Has the event in question caused fear, or put the status of national fiat currencies into jeopardy?

This could have a short-term negative effect on the price of cryptocurrencies but as we have seen, just like gold, people turn to cryptocurrency, in particular Bitcoin, as a store of wealth, a way to preserve purchasing power, and a hedge against inflation. Bitcoin has shown varying degrees of correlation between both gold prices and the stock market over the years.

When the stock market takes a hit or reacts negatively to global events, investors often experience fear, uncertainty, and doubt, forcing them to exit the market, often at a loss. The knock-on effect this has on the cryptocurrency markets is usually quite predictable. When the stock market dumps, the crypto markets tend to follow suit. Recently, however, Bitcoin in particular has shown a decrease in correlation with the stock market.

This correlation is inconsistent, but it is frequent and recurring. Bitcoin may appear to be correlated to gold for some time, moving in the opposite direction to the stock markets. Or, as we saw in March, stock market crashes can have a major impact on the crypto markets.

That being said, as the average crypto investor matures, this volatility presents many buying opportunities when dips occur. This year, several esteemed investors and wealth managers have shown support for cryptocurrency on national television, with many investors that had previously cast doubt on cryptocurrency now suggesting that Bitcoin should be a staple investment in any portfolio.

Investment gurus, members of government and other public figures openly supporting Bitcoin are helping to change public opinion and increase the potential for cryptocurrency mass adoption. Political discourse plays a huge role in fundamental analysis for cryptocurrency. Uncertainty in politics makes investors wary of making significant moves. People are reluctant to make big financial plays when the hands of power are in the balance. Policies can change quickly and what may have been a good deal, to begin with, could result in serious upset if governmental policies change the outcome of any investments.

Some countries are imposing strict capital controls which often leads to capital flight. With recent reports of several centralized exchanges shutting down due to state enforcement, a good understanding of regional regulations is key to staying ahead in the crypto markets. There are several ongoing inquiries and investigations into nefarious activity within the crypto space that have been dragging on for years. The industry is young, and up until recently has been highly unregulated.

This is, however, changing quickly. As many fintech firms, payments processors, and traditional financial institutions look to implement blockchain-based services into existing business models, the need for higher crypto regulation is evident by the ever-evolving regulatory landscape.

Highly regulated crypto exchanges such as Kraken are looking to implement traditional banking services alongside cryptocurrency offerings with the introduction of crypto banks. San Francisco-based crypto firm Kraken recently received a US banking license which will allow the company to provide banking services in the state of Wyoming, with plans to expand in the near future.

Additionally, crypto banks could play a major role in expediting crypto regulation. If you want a deeper understanding of cryptocurrency regulation, along with the benefits and drawbacks of crypto regulation, be sure to visit Ivan on Tech Academy. It could be argued that increased regulation and centralization is bad for crypto.

Equally, by implementing blockchain technology at an institutional level, it is difficult to ignore the scope for increased innovation and reduced friction. With better regulation, it will be easier to tackle crime, and interoperability with the traditional financial sector could be streamlined, but more importantly, higher levels of regulation could help to bring trust into the space and help change public perception of cryptocurrency.

If the increase in centralized crypto custodians results in a heavily regulated industry, it could spell the end for many non-KYC exchanges such as Bitmex. The big money coming into crypto is not coming in through sketchy exchanges that could be put under investigation at any time. The serious money is coming in through highly-regulated, reputable establishments that loook to push the utility of crypto-based financial instruments into the mainstream, which can only be achieved by playing by the rules.

If we want to see more crypto pension funds or even a Bitcoin ETF, regulation will be paramount to making it happen. Regardless of where you stand on this, it is something to bear in mind. Crypto regulation is evolving, and this can have a serious impact on the market.

Though it may seem obvious to some, the use cases of a cryptocurrency project are generally the key to its success. What is the value proposition of this project, and how is it being utilized to increase engagement?

If a platform regularly introduces new features and improvements to its protocol, chances are they are committed to expanding the user base of the platform. Many crypto projects hit the market with a simple offering, often with one or two core features. With continued development and the addition of new features, the use cases for crypto projects can increase exponentially.

Looking at some of the most successful altcoins of the year, most of them offer a range of compelling use cases and continue to add innovative new features as the platform develops. One of the easiest ways to see how a project is progressing is by looking at how much time is spent on development. An active Github repository can show potential investors how much work is going into a project. If a project shows no activity on Github, has little social media engagement, and an inactive community, it shows that the project is perhaps not active.

This should ring some alarm bells for investors, as inactivity and a lack of development from a crypto project shows that the project is not innovating.

Innovation is key in blockchain, so if a project is stagnant, then one might question the value proposition of the investment or the legitimacy of the project.

In the digital age of social media, it has never been easier to engage with an audience or community. A great deal of the hype around cryptocurrency comes from announcements made on social media platforms by cryptocurrency projects. Social media marketing plays a crucial role in keeping the crypto community in anticipation of the latest updates with announcements of announcements!

Everyone is online these days, so by providing the crypto community with a steady stream of news and updates keeps the excitement alive for potential investors.

A project may go quiet for a while, but if they are active on Github and its roadmap shows a major update on the horizon, announcements can have a major impact on the crypto market. In particular, when a coin is listed on a major exchange, the price often spikes considerably as the news spreads. New partnerships and collaborations between cryptocurrency projects have proven to be a significantly bullish indicator on occasion.

Although many of these announcements are insignificant, some can cause serious price action for the cryptocurrencies involved. Economies and markets are cyclical. The crypto market is no different. Historically this has been a catalyst for a bull market following an extended bearish period.

These long-term trends can last months or years, but between these cycles, there are several altcoin cycles that emerge in line with current trends. This summer we saw some consistent narratives throughout the height of the alt cycle. Decentralized finance DeFi became the hottest trend in crypto this year after decentralized money markets such as Aave , Compound and Maker popularized collateralized lending and borrowing on the blockchain. Non-custodial Decentralized exchange Uniswap attracted record trading volumes throughout Q3, resulting in a wave of DeFi projects and applications emerging in hopes of catching the DeFi hype train.

Another key narrative this year has been the use of oracles. To get real-world data onto the blockchain reliably for use in smart contracts, almost every Defi platform relies on oracles. Oracle providers such as Chainlink and Band Protocol performed extremely well during the recent alt cycle and are expected to continue to flourish in the coming months. Cryptocurrency adoption is on the rise. With major players such as Paypal, JP Morgan, and Visa all looking for a piece of the pie, many skeptics are finding it difficult to ignore the fact that perception is changing, and cryptocurrency is becoming a legitimate asset class.

The implementation of blockchain technology on an enterprise level is driving mass adoption like never before. Projects such as Origin Trail and Baseline Protocol are bringing the blockchain to major industries in a variety of interesting ways, including the use of public blockchains to integrate with and update internal systems, to the use of blockchain in supply chain management , healthcare , and the fashion industry.

Blockchain gaming is also helping to push crypto adoption, with a thriving non-fungible token NFT market helping to create in-game economies where players can buy and sell rare or unique items that are tokenized on the blockchain. The scope for blockchain adoption is huge. Soon we could see NFTs being used for putting mortgages on the blockchain and there is a good argument for election votes to be counted on the blockchain too.

As education in the field continues to progress, and more people learn about the potential use cases for blockchain-based applications, the more factors there will be to consider when investing in cryptocurrency.

There are numerous factors to consider when trading and investing in cryptocurrency. Fundamental analysis, combined with technical analysis and on-chain analysis, can provide an all-encompassing perspective of the cryptocurrency landscape, helping you to make the best, most informed decisions possible, whether you are day trading or hodling for the long-term.

The biggest driving factors in almost every market is emotion and sentiment. By having an ear to the ground and understanding what drives market sentiment, the use of fundamental analysis for cryptocurrency gives traders and investors a perspective that cannot be observed on any chart. Nevertheless, the most important factor to take into account when conducting fundamental analysis is to have a solid understanding of the underlying technology.

Crypto and blockchain education is imperative to comprehending what is happening in the space. Check it out today, and join one of the most vibrant blockchain education communities anywhere! By subscribing you agree to the Terms of Use and Privacy Policy.

Learn Crypto and Blockchain

Keeping up to date and staying informed in crypto can be exceedingly difficult. Crypto never sleeps, so information is extremely time-sensitive and can come from many different sources you might not expect. Among other techniques, fundamental analysis is key to staying on top of the latest happenings in the crypto space. But what is fundamental analysis for cryptocurrency?

Technical Analysis Explained: Elementary Concepts In Trading Cryptocurrency

Bitcoin is one such well-known cryptocurrency. To invest in it, you need to understand the technical analysis behind Bitcoin. After all, without technical analysis, trading cryptocurrencies becomes a dangerous guessing game! This blog is a bit technical, but it is meant to help beginners understand the basics of Bitcoin and how technical analysis can help them make informed investment decisions. If you want to be a successful investor in cryptocurrencies, then this blog is a great starting point. Why Should Beginners Begin with Bitcoin? If you are new to the world of blockchain and cryptocurrency, it can get overwhelming to filter out reliable cryptocurrencies from unreliable ones. Several cryptocurrencies, popularly dubbed "meme coins", like Dogecoin, Shiba Inu and Poocoin, have popped up in recent times and have cost rookie investors a large chunk of their investments. On the other hand, Bitcoin is a much safer if not the safest cryptocurrency to invest in. It is the first deflationary crypto token to come into existence and has recently reached an all-time high ATH of over USD 65, per Bitcoin!

Fundamental Analysis For Cryptocurrencies: The Definitive Guide

The crypto platform is teaming up with James's I Promise School to educate students on cryptocurrency and blockchain. Check bitcoin and cryptocurrency prices, performance, and market capitalization, in one dashboard. For the 'Sage of Omaha' and other traditional value investors, it isn't different this time or ever. Beckham announced in November that he planned to convert his salary for this NFL season into bitcoin. The Diem Association, the consortium Facebook founded in to build a futuristic payments network, is winding down and selling its technology to a small California bank that serves bitcoin and blockchain companies for a

How to perform crypto fundamental analysis

Immediately, as happened in a lot of people started trying to improvise themselves as professional traders. While some of them have made decent returns in the past few months, there is no doubt they are going to give them back to the market once prices stop going up. After all, there is no need to be a genius to make money when everything that claims to be a cryptocurrency goes parabolic. Real traders are those that can milk the market when things are good and protect their capital when prices are going South. This is why you need to learn the right trading strategies if you want to truly build long term wealth, not just make a few dollars here and there.

Introduction to Technical Analysis

Immediately, as happened in , a lot of people started trying to improvise themselves as professional investors. While some of them have made decent returns in the past few months, there is no doubt they are going to give them back to the market once prices stop going parabolic. In fact, they are going to sell their bitcoins to those that have a solid investing strategy that allows them to build real wealth. This is why you need to learn the right investing strategy if you want to truly build long term financial success, not just make a few dollars here and there. The beauty of Bitcoin investing is that it does not require a lot of money to get started.

Bitcoin Basics. How to Store Bitcoin. Bitcoin Mining.

Bitcoin fundamentals being so strong helped send the cryptocurrency into a parabolic uptrend. Blockchain data revealed each times coins left exchanges in bulk, and the reduction in BTC reserves was evident to any onlooker thanks to the transparency the tech provides. But unfortunately, a recent wave of bullish fundamentals still failed to overpower bearish technicals and sentiment, which have now turned the trend for the time being. Fundamental analysis focuses on data , not charts, but is equally important as technical analysis.

This article is all about how to analyze cryptocurrency before actually investing. If you are new to cryptocurrencies and investing, this guide will help you make a good evaluation and analysis before you put any money on the table. Where should a beginner invest and how should they go about doing a proper analysis of a digital asset? Today, I will give you a good base to stand on before you choose your next crypto investment when it comes to fundamental analysis, technical analysis, and sentiment analysis of cryptocurrencies. But much like any other endeavor in the financial landscape, crypto investments require detailed planning and investigation before you can choose your future investment. In this guide, you will get a hands-on tutorial and checklist on how to analyze cryptocurrencie s that you can apply today to your own investment strategies and analysis.

Immediately, as happened in , a lot of people started trying to improvise themselves as professional investors. While some of them have made decent returns in the past few months, there is no doubt they are going to give them back to the market once prices stop going parabolic. In fact, they are going to sell their bitcoins to those that have a solid investing strategy that allows them to build real wealth.