How to do fundamental analysis of crypto currencies? In this article on shetcoiner site, we want to consider this issue; so stay with us until the end of this article.
What is fundamental analysis?
Fundamental analysis determines the intrinsic value of an asset, which means a measure of its value. Evaluate basic information about crypto currency projects and tips on whether currency is undervalued or overvalued. Crypto currency markets are incredibly volatile; even reputable currencies such as Bitcoin and Ethereum are subject to sudden fluctuations. Investing in newer currencies and tokens is more risky unless you know what you are investing in. Doing fundamental analysis allow investors and experienced traders to predict market movements with confidence. Using fundamental analysis, traders can develop informed strategies with a better chance of profitability. In the following parts, we will examine the factors that you should pay attention to in fundamental analysis.
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What should you pay attention to in fundamental analysis?
- Hash rate
Blockchain plays an important role in network security and data is valuable for fundamental crypto analysis. Bitcoin and Ethereum are two examples of cryoti currencies that run on the Proof of Work (PoW) Blockchain. PoW requires crypto miners to solve calculations and verify any transaction, while preventing malicious attackers from gaining control of Blockchain. Doing this allows the controller to change or stop other transactions to which it does not belong.
- Status of active addresses
Active Addresses Specify the number of active Blockchain addresses over a period of time. One of the easiest approaches is to collect the number of sending and receiving addresses in different periods. Calculate active addresses over days, weeks, or months, and compare growth or decline with activity measurement and interest in currencies or tokens. Another way is to collect the number of unique addresses in predefined courses and then compare the results.
- Liquidity and trading volume
Liquidity is a measure of how much an asset is bought and sold. Liquidity is strong if a crypto currency asset can be bought or sold quickly without strongly changing its market value. A crypto currency or token will have many buyers and sellers in a range of orders waiting to be filled. in turn, limits supply offers, which are a strong measure of liquidity.
- Compare the competitor
Market competition separates winners from losers. Doing a thorough search for market competitors determines the perspective in which each project must compete. Understanding the overall system is crucial to evaluating the potential of a project. In this article on shetcoiner site, we review the fundamental analysis and criteria that are important when reviewing with this method.