Feb 17, 2023
Investment Success: 10 Steps to Cryptocurrency Fundamental Analysis
Fundamental analysis is a key element of any successful crypto investing strategy. It involves researching the intrinsic value of an asset to determine whether it is overvalued or undervalued. But it’s different from traditional stock market analysis because of the lack of historical data, such as earnings reports or profit and loss statements.
To get the most out of fundamental analysis, there are 10 steps that can be taken to evaluate the profit potential of any asset before investing or trading.
1. Read the white paper
The white paper is the document that gives an intentional and detailed overview of a project. It should explain the project’s goals, use cases and distribution, the team’s vision, the technology behind the token, plans for upgrades and new features, and 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. Ask hard questions and get complete answers. Find out if the tokens are really distributed the way they promise and if they are meeting the road map expectations.
3. Look at competitors
Nearly 40% of cryptocurrencies listed in 2021 no longer exist, so it’s important to consider whether the use case is viable and wanted. Identify competing projects and examine existing projects this new one might replace, if successful.
4. Look at the team behind the project
A project is only as good as the team behind it. Check the credentials of each team member and see if they have experience in other successful projects. Also, look at the developer community to see the number of contributors and activity levels.
5. Look at on-chain metrics
On-chain metrics can be pulled from websites or APIs. Look at transaction count, transaction value, active addresses, fees paid, hash rate, and staking.
6. Look at the tokenomics
Invest in projects that create useful tokens. Investigate the inflation or deflation rate and if it was an ICO asset.
7. Market cap, trading volume, liquidity
Look at the market capitalization, trading volume, and liquidity.
8. Community
When a community is behind a project, it tends to help the token appreciate in value. Look at the social media activity and sentiment.
9. Marketing
The team behind a project needs to actively market its token in order to differentiate itself from the crowd. Check to see if they have a dedicated marketing team and if they are increasing market share.
10. Test the product
If the core product is available, test it out. This can help inform a potential investing decision.
By following these 10 steps, investors can get a better understanding of the project and the potential for profit. It’s important to do the research and be aware of the risks before investing in any crypto asset.
The rise of NFTs has made it even more important for investors to understand the fundamentals of a project before investing. NFTs are digital assets that are recorded on a blockchain and can represent a wide range of assets, from digital art to real estate.
NFTs are becoming increasingly popular, and more and more businesses are turning to NFTs as a way to promote their products and services. But it’s not just businesses that are getting involved — investors are also looking to capitalize on the potential of NFTs.
For investors, it’s critical to understand the fundamentals of the project before investing. This includes researching the use cases, the team behind the project, the tokenomics, the market capitalization, trading volume, liquidity, and the community behind the project.
It’s also important to consider the marketing of the project. Does the team have a dedicated marketing team? Are they increasing market share? Are they using social media and other channels to promote the project?
Finally, if the core product is available, it’s important to test it out and make sure it works as expected.
At Cointelegraph Markets Pro, investors can get the market-moving data they need to make informed decisions. With the right fundamental analysis, investors can make smart decisions when it comes to buying, selling, and trading NFTs.
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.
