How to perform a fundamental cryptocurrency analysis
The world of cryptocurrencies has grown exponentially in recent years, with millions of people in the world investing their sweat money in this class of digital assets. Although many investors are attracted by high returns of cryptocurrencies and fast growth potential, a faster investment approach is recommended. One of these approaches is the main analysis, which includes a study of the basic economy of cryptocurrency, market trends and technological progress before making an investment decision.
What is a fundamental analysis?
The main analysis is the process of analyzing a company or active on the basis of its inherent value, financial statements, sectoral trends and other relevant factors. In the context of cryptocurrency, the fundamental analysis includes an evaluation of the basic cryptocurrency economy, such as its supply and supply, extraction costs, transactions and acceptance rates.
Types of fundamental analysis
There are several types of fundamental analysis that can be applied to cryptocurrencies:
- The higher ratio may indicate an underestimation.
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How to perform a fundamental cryptocurrency analysis
To perform fundamental cryptocurrency analyzes, follow these steps:
- Research cryptocurrency : Learn about your main economy, technological progress and market trends.
- Review the financial statements : Analyze the balance of cryptocurrency, the demonstration of results and the demonstration of the cash flow to evaluate your financial health.
- Estimate the market capitalization : Compare the market value of cryptocurrency with similar assets to evaluate its relative size and potential for growth.
- Estimate the percentage of admission
: Evaluate the percentage of cryptocurrency admission, including the participation of institutional investors and retailers.
- Look at regulatory developments : Look at the regulatory developments associated with cryptocurrency and their potential impact on the sensation and prices on the market.
An example of analysis
Let’s look at an example of Bitcoin Analysis (BTC):
* Price ratio (p/e) : BTC is negotiated in the p/and 20 ratio, which indicates an underestimation.
Analysis of financial demonstrations : Bitcoin balance review, demonstration of results and demonstration of cash flows reveals a significant increase in the cost of extraction last year, which may affect profitability.
* Market capitalization analysis (CAP) : Comparing BTC with such assets reveals that it has a market value of about $ 50 billion, while many other cryptocurrencies have less market restrictions.
* Analysis of the percentage of admission : The assessment of the percentage of Bitcoin acceptance reveals high participation from institutional investors and retailers, which implies a strong demand for cryptocurrency.
* Regulatory analysis : Review of cryptocurrency -related regulatory developments shows continuous effort for regularly.