The fundamental evaluation of cryptocurrencies: evaluate the real value
Cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), have acquired significant attention in recent years due to their potential for the high investment yields. However, despite their popularity, many investors remain uncertain about the true value of cryptocurrencies. A fundamental value approach can provide a more objective evaluation of the underlying activities of the market.
** What is fundamental evaluation?
The fundamental evaluation is a method used to estimate the intrinsic value of an asset based on its historical price performance, trends and other external factors. This approach contrasts with technical analysis, which focuses on market models and trends. On the contrary, a fundamental value considers various factors that can influence the value of the activity.
Key factors in evaluating cryptocurrency
When evaluating the true value of cryptocurrencies, several key factors come into play:
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- Price volatility : cryptocurrencies are known for their high prices of prices, which can be influenced by external factors such as regulatory changes or global economic events.
- Regulatory environment : governments and institutions can affect the adoption and value of cryptocurrencies.
- Network effects : The network effect of a cryptocurrency reference to its ability to attract more users and transactions, leading to an increase in supply and price.
- Limited supply
: most cryptocurrencies have a limited offer, which can contribute to their perceived value.
How to evaluate the evaluation of the cryptocurrency
To evaluate the true value of cryptocurrencies, consider the following phases:
- Calculate market capitalization : use reliable sources such as coinmarketcap or cryptously to determine the market capitalization of each cryptocurrency.
- Analyze the performance of historical prices : review the history of cryptocurrency prices to identify trends and models.
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- Evaluate the effects of the network : consider the network effect of a cryptocurrency, including its users’ base and the volume of transactions.
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Study cases:
- Bitcoin (BTC) : In 2017, Bitcoin price recorded significant volatility due to regulatory variations in China. However, its market capitalization grew rapidly when institutional investors entered the market.
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Conclusion
The fundamental evaluation is a more nuanced approach than technical analysis. Considering key factors such as supply and demand, market capitalization and the regulatory environment, investors can obtain a better understanding of the true value of cryptocurrencies. Although no single factor guarantees the success of investments, the fundamental evaluation provides a picture to make informed decisions in the cryptocurrency market.
Advice
- Diversify your portfolio
: spread your investments on multiple cryptocurrencies to minimize risk.
- Stay informed : Educating yourself on market trends and regulatory updates continuously.
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