How to perform fundamental analysis for investments in encryption

The cryptocurrency world is on a wild ride in recent years, with prices floating uncontrollably and investors seeking returns that are usually incomparable by traditional investments. As a result, investment in cryptocurrencies can be exciting and intimidating. Although the potential of high returns is undeniable, it is essential to separate the hype from the fundamentals when making investments in cryptocurrency.

What are fundamental factors?

Before diving into how to perform fundamental analyzes, let’s define what fundamental factors mean in the context of cryptocurrencies. Fundamental factors refer to the underlying characteristics of a cryptocurrency that can affect its value and performance. These factors include:

• Supply and Demand : The balance between the number of currencies in circulation (supply) and total market capitalization (demand).

• Technical Analysis : Technical indicators such as graphs, standards and trends, which provide information about the currency price movement.

• Regulatory Environment : Government policies, laws and regulations that affect the cryptocurrency market.

• Market feeling : The general attitude of investors, including optimistic or low feelings.

Performing fundamental analysis for investments in encryption

To perform fundamental analysis for investments in encryption, follow these steps:

• Choose a cryptocurrency : Select a cryptocurrency with a strong foundation and growth potential. Research WhitePaper, Roadmap and Mint to get a sense of their underlying technology and use.

• Evaluate supply and demand : Analyze the dynamics of supply and demand in your chosen cryptocurrency. See price charts and compare them with historical data to identify standards and trends.

• Analyze the technical indicators

  

  : Use technical indicators such as moving averages, relative force index (RSI) and Bollinger bands to assess the moment and the feeling of the currency.

• Evaluate the regulatory environment : research policies and laws related to cryptocurrencies in the chosen market. Consider factors such as taxation, licensing requirements and money laundering regulations.

• Evaluate market feeling : See market trends and feelings of feelings, such as social media conversations, on -line forums and communities, to evaluate the enthusiasm of investors by cryptocurrency.

Case study:

We will examine the fundamental analysis of Bitcoin (BTC) using the steps described above.

* Supply and Demand: Total offer of BTC is limited to 21 million, while total market capitalization is over US $ 2 trillion. This creates a strong demand imbalance.

* Technical Analysis: The BTC price chart shows a consistent upward trend, with a strong increase in high and long -term moving averages. The RSI is 70 years old, indicating excessive search conditions.

* Regulatory Environment: Bitcoin operates in an unregulated market, making it attractive to governments seeking to adopt cryptocurrencies for their own purposes. The regulatory structure of the European Union also aroused interest in the BTC as a potential value storage.

* Market Feeling: Conversations on Twitter and On -Line forums are filled with optimistic feelings about Bitcoin, driven by the recent price increase.

Conclusion

Conducting fundamental analysis for investments in encryption requires attention to detail and an understanding of the underlying factors that generate cryptocurrency prices. In assessing the dynamics of supply and demand, analyzing technical indicators, evaluating regulatory environments and examining market sentiment, investors can get a deeper understanding of their chosen cryptocurrencies and make informed investment decisions.

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