How to perform a fundamental analysis for cryptographic investments
Cryptocurrencies, such as Bitcoin and Ethereum, have acquired significant attention in recent years due to their high investment potential. However, like any other financial instrument, cryptocurrencies are subject to different factors that can influence their value. One of the most crucial aspects of investments in cryptocurrencies is the fundamental analysis, which implies evaluating the intrinsic value of a company or active based on its economy below and market dynamics.
In this article, we will guide it through the process of carrying out a fundamental analysis for cryptographic investments, highlighting concepts and key techniques to help you make informed decisions.
Understanding of the bases of the cryptocurrency
Before immersing yourself in a fundamental analysis, it is essential to understand the basic bases of the cryptocurrency. Here are some key aspects to consider:
- Extraction and transaction costs
: The cost of extraction of a cryptocurrency can vary significantly depending on the specific blockchain protocol. In addition, transaction costs such as gas rates can also affect the general profitability of a project.
- Scalability : How well good is the cryptocurrency technological scale to satisfy a growing question? Can you manage the increase in load without compromising performance?
3 Understanding the dynamics of the demand can help you identify possible price trends.
- Regulatory environment : cryptocurrencies are subject to regulatory environments variable in different countries. This can affect its adoption, trade and general value.
- Network effects : The success of a cryptocurrency is often guided by the effects of the network. Since more users join the network, it becomes more and more difficult for new users to participate, which can lead to greater question.
types of cryptocurrency fundamentals
There are different types of bases to consider when performing a fundamental analysis:
1
2
- Trends in the sector : the panorama of the sector in general can influence the demand and adoption of a cryptocurrency.
Passage guide for the fundamental analysis
- Search : conduct an exhaustive investigation into the company or active in which you are interested in investing. Read news, reports and other sources to obtain a profound understanding of its technology, market dynamics and regulatory environment.
- evaluates the key performance indicators (KPI) : identify key kPi as income growth, users’ base, volume of transactions and adoption rates. Analyze these metrics to evaluate the growth potential of the project.
- evaluates the sensation of the market
: evaluate the sensation of the market through the analysis of conversations on social networks, forums of investors and other online discussions relating to cryptocurrency or active in which you are interested in investments.
- Compare with your peers : compare your cryptocurrency chosen with your peers in terms of KPI, market dynamics and regulatory environment.
- Perform a competitive analysis : identify potential competitors and evaluate their strengths, weaknesses and market shares.
Example: evaluation of the fundamental analysis of Bitcoin
We use Bitcoin as an example to illustrate the fundamental analysis process:
1
2
3.