Fundamental Analysis Techniques For Crypto Investors
Fundamentals of cryptocurrencies: essential analysis techniques for cryptographic investors
The world of cryptocurrency has exploded in popularity during the last decade, with new coins and tokens that are thrown every few months. However, as the market grows, so does the need to make informed decisions. As a cryptographic inverter, it is essential to have a solid understanding of fundamental analysis techniques to make informed investment decisions.
What are the fundamental analysis techniques?
The fundamental analysis is the process of financing analysis, management team, industry trends and competitive panorama of a company to predict its future performance. In the context of cryptocurrency, the fundamental analysis implies evaluating the market, currency or token, as well as its underlying technology and development.
Key concepts for the analysis of cryptocurrency foundations
Before immersing yourself in technical analysis, here are some key concepts to understand:
- Market capitalization : The total value of all pending currencies in a particular cryptocurrency.
- Supply and demand : The balance between buyers and vendors that lead the price of a cryptocurrency.
- Block chain development : The underlying technology that feeds cryptocurrencies, including scalability, safety and compatibility with different use cases.
- Regulatory Environment : Government laws and regulations that govern transactions and cryptocurrency trade.
- Cryptocurrency Mining
: The transaction validation process in the Blockchain network and ensure the network.
Technical analysis techniques for cryptocurrency foundations
To support the fundamental analysis, you must include the technical indicators that provide information on the pricing patterns of a currency or token. Here are some essential techniques:
- Mobile averages (MA) : A line chart that draws prices for different periods of time to identify trends and predict future price movements.
- Relative Force Index (RSI) : An impulse indicator that measures the speed and change of price movements, providing an idea of whether a currency or token is overloaded or overall.
- Bollinger bands : An indicator of volatility that draws the price above and below two mobile averages, creating bands that represent a variety of prices.
- Support and resistance levels : Price ranges where buyers and sellers are more likely to enter the market, influencing price movements.
- Candelabros patterns : visual indicators used in the technical analysis to predict price movements based on opening and closing prices.
Example: fundamental analysis of Bitcoin
For example, let’s analyze the foundations of Bitcoin:
- Market capitalization: around $ 1 billion
- SUPPLY: 21 million currencies
- Blockchain development: decentralized, open source and widely backed by developers
- Regulatory Environment: Regulations issued by the Government that govern cryptocurrency transactions in many countries
- Cryptocurrency Mining: Labor Test Consensus Algorithm (POW)
Using these fundamental analysis techniques, we can identify possible purchase opportunities when the market is oversight or predicted a strong upward trend when supply increases and demand is high. On the contrary, we can sell coins or tokens during periods of high volatility or regulatory uncertainty.
The best practices for the fundamental analysis of cryptocurrencies
- Maintain updated : Regularly control market trends, news and regulatory updates to guarantee precision.
- Use multiple indicators : Combine the technical analysis with fundamental analysis to obtain a more comprehensive understanding of currency performance.
- Diversify your portfolio : Disseminate investments in several currencies or tokens to minimize risk.
- Establish detention problems and profit purposes : Limit potential losses by establishing clear objectives and using detention orders and profit purposes.
5.
