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Fundamental Analysis

Fundamental Analysis

The Basics of Fundamental Analysis

Fundamental Analysis is defined as researching and analyzing the fundamental properties of a cryptocurrency coin is essential to building a strong portfolio. Technical analysis and sentiment analyses are valid for short-term setups, but if you’re investing in projects for the long term, you have to make sure the fundamentals are valid.

At its core, the fundamental analysis consists of the attributes that stand the test of time, generally unaffected by market conditions or community sentiment.

What Problem Is The Project Solving?

What problem is the project or protocol attempting to solve?

This info reveals crucial details about your possibly investing in this project.

What Are The Project’s Problem Statement and Use Cases?

If you don’t know what problem the project solves after researching, you probably should think twice about making an invest. It demonstrates that the team can or cannot communicate succinctly and effectively. An overall lack of clarity often indicates a poorly put together team.

Market Size and Capitalization
Understanding the problem helps you to measure market size. Some teams will talk about how big the market share is, either on their website or in their white paper. Market size is a key determinant of how lucrative your ROI could be. The difference in market size does not mean that you should invest in one over the other, but you should keep it in mind as you analyze your risk versus reward. Do not compare coin prices.

Team, Advisors, and Partnerships
The team building the crypto is one of the most important steps when conducting fundamental analysis. Some even argue that the team is actually the most vital aspect.

The team creating the cryptocurrency should have experience not only in blockchain but, more importantly, in the industry that they’re entering.

Seasoned advisors can fill any gap that a team has in their experience. The support of respectable technologists and businesspeople also brings a level of credibility to a project.

Partnerships may be of strategic value, collaboration efforts, or even acquisitions. Always do your due own research regarding partnerships. A lot of projects are reasonably loose with who they list as a “partner.” They may include service providers, potential partners, and sometimes mislead or even lie about who they are partnered with or partnering with.

A team may have the greatest cryptocurrency in the world, but if no one’s using it, it’s worthless. Because many blockchain projects are pre-product, discovering one with significant traction may be difficult. If you do find one with a working product and actual customer base, that’s a great sign. It shows that the team has already made it further than 90 percent of other startups.

Token Economics
Be aware of Inflation rates, Distribution, Consensus Mechanism, and Token Burn.

Blockchain Competitors
When looking at competition, compare the market caps of similar functioning tokens to see if your potential investment is undervalued. Do not compare coin prices.

You should continuously evaluate the fundamentals of the projects in which you’ve invested. Join the Telegram groups of your investments. Follow them on Twitter. Browse cryptocurrency subreddits. The more you research and get comfortable reading white papers, the better investor you will overtime turn into.

A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.

- Robert Frost

Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labor. It’s about stewardship and, therefore, about achieving the good society.

- Robert J. Shiller

It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.

- Robert Kiyosaki

Too many people spend money they buy things they don’t impress people that they don’t like.

- Will Rogers

To be a super-trader, you'll need an edge to overcome the laws of probability and the uncertainty of the marketplace. That edge comes from information flow, the ability to correct your habits in terms of the market's characteristics, and being able to take risks, cut losses, expand your information network, ferret out ideas, and take recommendations.

- Ari Kiev