Feb 17, 2023
Discover How to Analyze Crypto Assets with 10 Fundamental Steps
Fundamental analysis is a process of evaluating the intrinsic value of an asset in order to determine whether it is properly valued or not. This process is slightly different when it comes to cryptocurrency assets, as there is no historical data on earnings reports or profit and loss statements. Thus, in order to assess the fundamental value of a crypto asset, research needs to be conducted to investigate the use cases, the network, the team behind the project, vesting schedules, and more.
To help investors make informed decisions, here are 10 steps that are found to be most useful when conducting fundamental analysis of a crypto asset:
1. Read the white paper
The white paper is the document that provides an overview of the project, including its goals, use cases, the team’s vision, the technology behind the token, and plans for upgrades and new features. It is important to read the white paper to understand how the token provides value to users.
2. Assess the claims of the white paper
Be skeptical of the claims made in the white paper, as some people behind projects may bend or even break the truth. It is important to ask questions and get complete answers before investing in a project.
3. Look at competitors
It is important to understand the use case the crypto asset is targeting and the problem it is trying to solve, and to identify competing projects and examine existing projects this new one might replace.
4. Look at the team behind the project
The people behind the project must have the right skills to make the project work. Check the credentials and experience of the team members, and see if they are reputable members of the crypto community.
5. Look at on-chain metrics
On-chain metrics can be obtained from websites or APIs that provide data on the blockchain. These metrics include transaction count, transaction value, active addresses, fees paid, hash rate, and staking.
6. Look at the tokenomics
Invest in projects that create useful tokens, and examine the inflation or deflation rate and whether it was an ICO asset.
7. Market cap, trading volume, liquidity
Check the financial metrics of the token associated with a project, including market capitalization, trading volume, and liquidity.
8. Community
Look at the community that is backing the coin, and see if there is social media excitement about it.
9. Marketing
The team behind the project needs to actively market its token in order to differentiate itself from the competition. Check if the team is increasing market share.
10. Test the product
If the core product is available, it is a good idea to test it out to see how it works.
By following these 10 steps, investors can make informed decisions when evaluating the profit potential of any crypto asset before investing or trading. Furthermore, Cointelegraph Markets Pro provides market-moving data before this information becomes public knowledge, enabling investors to make smart decisions.
Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.
