Fundamental analysis is one of the keys to success in the financial markets, and cryptomontages are no exception. Here are some useful tips.
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Fundamental analysis is a methodology used to attempt to predict the medium- and long-term behaviour of a specific asset. When it comes to cryptomonies, certain issues have to be taken into consideration to make the analysis as accurate as possible.
One of these questions is the fact that cryptomonies are born from specific technological projects and therefore we can define, according to certain parameters, if the cryptomonies at some point are undervalued and therefore their price will tend to rise in the future, or if not they are overvalued and will tend to devalue over time.
From what approach should fundamental analysis in cryptomonics be taken?
There are two approaches to fundamental analysis which seek to make accurate predictions by segmenting information into strata which can range from macro to micro or from micro to macro.
In the first approach, known as Top Down, the macroeconomic aspects are first analysed, i.e. the state of the world economy and the different factors affecting it.
In a second stage, the economic situation of the company’s country of origin and the countries in which it is present are analysed. In the case of Bitcoin, for example, which has a strong presence in Asian countries, the economic aspects of these countries greatly affect its behaviour. Finally, the company as such, its actions and finally the most promising sectors are analysed to find the best options for investment.
Depending on your preferences, this might be a better approach to investing in Bitcoin. This approach seeks to do the exact opposite of the previous approach. In this case, you prioritise asset-specific research, then scale up to the economic situation of the country where it is located, and finally the state of the world economy and how the latter might affect the behaviour of the cryptomoney.
What tools do you use in the fundamental analysis of cryptomon currencies?
In the fundamental analysis it is possible to use different tools, which will give you certain clues that you can use to finally predict which movements the value of the asset is likely to show, and you will be able to define in which cryptomone currency you should invest.
You can use the periodic financial statements, financial ratios, the valuation of the companies that issue the asset, economic forecasts, general economic information, that is to say, important news and events and basically any information that is capable of modifying the value of the asset and, therefore, that can be decisive for the path you will choose in the investment.
The fundamental analysis in the cryptomonies is a good technique to make holding, since it allows to estimate prices in the long term, for example, for three months or for a year, since it takes different factors that could lead the asset to a determined price.
In any case, checking events with historical technical analysis can help to verify whether there are similar precedents that have triggered specific reactions in the value of an asset. However, this is not 100% effective, especially with cryptomonies that have greater volatility and the tendency to create value bubbles.