By considering quantitative and qualitative factors, the purpose of fundamental analysis is to predict the intrinsic value of assets both medium and long term. Although there are many contradictory opinions to use fundamental analysis on cryptocurrency. So, you can analyze where the price of cryptocurrency will move, whether it has increased or decreased. Then, what's the difference between technical analysis and fundamental analysis? Simple, technical analysis is an analysis conducted by looking at chart patterns or charts of price movements aimed at analyzing price trends. While the fundamental analysis is the determination of fair price or fair value that will be compared with market prices.
What is Fundamental Analysis?
The meaning is taken from crypto trading terms: Fundamental Analysis is a method of analysis based on issues, rumors, and various events that directly or indirectly have an influence on the performance of a crypto market. So the fundamental analysis is the determination of fair value that will be compared with the market price. Some experts have the opinion that this Fundamental Analysis is more suitable for making long-term decisions.
Fundamental Analysis is the observation and assessment of the conditions that underlie the price movements of a cryptocurrency. In crypto trade, this means that fundamental analysis is the observation and assessment of economic conditions that refer to, the global economy, inflation, war, disease outbreaks, crypto expert opinions
and others that can be used to predict crypto prices in the future.
Characteristics of fundamental analysis:
1. It takes time to obtain information such as economic data or the latest rumors.
Individual traders find it difficult to get info like this.
2. Is subjective because it involves the opinion of many people. A trader may
consider certain economic data good, but other traders judge bad.
3. More suitable for the medium to long term.
Crypto Fundamental Analysis Specifications
During the crypto trading process, every trader has their own strategies. There are those who use technical analysis, there are also those who prefer fundamental analysis, but it would be better and perfect to use the two methods of analysis. The main purpose of fundamental analysis is to measure the intrinsic value, that is, the true / actual value of an asset. In the crypto world, intrinsic value is measured from various aspects, for example, whether crypto coins have good market capacity, development by a reliable team, and can be supported by the community. In simple fundamental analysis is the analysis technique used by traders to predict cryptocurrency price movements. How? By learning all financial information related to digital assets and the technology behind it. Starting from looking for the latest news, intrinsic value, expert opinion, crypto coin characteristics, and the quality and prospects of the technology owned.
What factors should be considered?
If you want to apply fundamental analysis techniques to cryptocurrecyl, there are a number of factors to consider including:
1. White Paper Coins
A detailed proposal by the development team outlining the aims and mechanisms of the coin. This is the main source for evaluating coin basics. You should always read the white coin book before investing.
2. Amount of Supply
You need to know the supply or supply amount of the cryptocurrency you want to analyze. The amount of supply is the total crypto currency coins provided by the cryptocurrency system. For example, Bitcoin coins have a total supply of 21 million coins, Ethereum coins that do not have a certain number limit, and others.
3. Amount of Demand
The amount of demand is the market's absorption of crypto coins that have been circulating. That means you need to analyze how much market interest and enthusiasm the crypto coins are. As the number of market demand for Bitcoin or Ethereum crypto currencies continues to increase.
4. Community Forums: Reddit / Bitcointalk / Steemit.
Forums are a great way to understand coins better, as well as the sentiments that surround coins. You can find simple definitions of certain concepts or coin analysis that are easy to understand from forums, because the community is well-informed. The diversity of thoughts allows you to understand the mechanism of coins much better
5. Number and volume of cryptocurrency transactions
To make it easier when analyzing, you can look at the Coinmarketcap website to find out the number and volume of transactions of a cryptocurrency.
6. Network utilities
You also need to know how much it costs per transaction for a cryptocurrency. The cheaper, it will be increasingly in demand by crypto business people.
7. Blockchain Confirmation
Speed It's important to know the time period for confirming a transaction. Does the confirmation run fast or does it take a long time.
8. The level of adoption of a crypto currency
You also need to know whether cryptocurrency is easy to find and can be bought / sold on many exchanges
9. Big Event In addition,
you should also follow the latest developments that occur in the world of cryptocurrency. Starting from the news of the increase in cryptocurrency networks to major events such as cryptocurrency market hacking, inflation, epidemics such as Corona, as well as expert opinions etc. Send feedback History Saved Community
The two types of analysis, technical analysis and fundamental analysis, often raise questions about which is better between the two. In fact, these two types of crypto analysis have their respective characteristics and should be used together proportionally, not just one.
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