How to conduct a fundamental analysis of cryptographic investments
In recent years, the world of cryptocurrency has experienced a significant boom and bust series, and many investors have tried to profit from the market. However, conducting basic analysis is of key importance for making informed investment decisions. In this article, you will be led by the process of conducting a fundamental analysis of cryptographic investments.
What is the basic analysis?
Fundamental analysis is a method of assessing the company’s financial health and financial results by analyzing its basic data, such as income statements, balance sheets and statements regarding cash flow. This includes the identification of trends, patterns and indicators that can help investors understand the company’s perspectives and make informed investment decisions.
Why is the basic analysis important for cryptographic investments?
Cryptocurrency investments are very unstable and are subject to rapid price fluctuations. While technical analyzes and sentiment indicators can provide valuable information, fundamental analysis offers a more comprehensive understanding of potential threats and cryptocurrency awards. By conducting a fundamental analysis, investors can:
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- Rate the dynamics of the industry
: Understand the wider cryptocurrency ecosystem, including the main players, regulatory achievements and market trends.
Step by step guide after a fundamental analysis for cryptographic investments
- examine the company
* Visit the website, social media and information messages to get a general understanding of their products, services and business model.
* Identify key numbers such as members of CEO, CTO and board members.
- Check the financial statements
* Download financial statements (profit and loss account, balance, cash flow account) from the company’s website or get them via financial databases.
* Analyze trends, coefficients and patterns in these statements to identify strength and weakness areas.
- Rate the management team
* Review reports on the experience of the management team, qualifications and achievements.
* Search indicators such as cadence, prizes and industry recognition.
- Rate the dynamics of the industry
* Examine the market trends of cryptocurrencies, main players, regulatory development and market size.
* Identify the possibilities of growth and potential risk on the market.
- Rate market moods
* Review sentiments in social media, news sites and internet forums.
* Rate the level of support, bear or neutral sentiments among investors.
- Rate technical indicators
* Look at technical indicators such as price campaign, graphic charts and tools (e.g. RSI, Bollinger bands).
* Analyze trends, patterns and relationships between these indicators to identify potential possibilities.
Example: conducting a fundamental analysis for a specific cryptocurrency
Example Let’s take Bitcoin (BTC). Here’s how you can conduct a fundamental analysis:
- Examine the company : Find out about the Bitcoin project, its founders and the management team.
- Review the financial statements : Analyze the profit and loss account, balance and cash flow account in order to assess the increase in revenues, profit margins and market capitalization.
- Assessment Management Team : Review of review of the management team experience, qualifications and achievements.
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