Fundamental analysis is an approach used by cryptocurrency investors to establish the intrinsic value of a crypto asset. Investors examine several internal and external factors to determine whether the asset is undervalued or overvalued.

Important thing in FA

1. Review the White Paper

Most crypto projects provide a white paper, which helps define the objectives and technical details of the cryptocurrency. While some white papers may contain technical jargon not understood by casual investors, it is important to read through the paper to learn about the vision of a project.

2. Research the Team

Cryptocurrencies are typically created by a team of founders and software developers that help create the solution to a problem. To better understand how a project could perform, you should research the professional experience of the team running the project. 

3. Learn About the Leadership

Most crypto projects have a clearly defined executive team that handles the vision, execution, financials, and marketing of the company. Learning more about who is leading a cryptocurrency team can give insight into the probability of success for a project.

Here are a few questions to ask when researching a crypto company’s leadership:

Do they have a history of successful leadership positions?

Are they reputable/well-known leaders?

Do they have a history in the crypto industry? Is it good or bad?

Are they public-facing or anonymous?

4. Get to Know the Community

Cryptocurrency is a community-driven technology that typically requires a strong, supportive community to grow. Learning about the community for a given cryptocurrency can help you gauge whether a project will succeed, or if it is pure hype and speculation.

Joining the community Discord or Telegram channel can help you learn more about the community of a given cryptocurrency, as well as get your questions answered about the project itself. If there is a large community base that is well-organized and frequently promotes the project, this could be a sign of a growing cryptocurrency. If there is sparse engagement and no substantive discussion on any community platforms, this is a red flag.

5. Understand the Technology

Cryptocurrencies are a new type of technology that are designed to improve financial services, as well as solve financial problems. Crypto projects are built on blockchain technology, but there are many innovations and variances to how they function

Understanding how the technology is being used to solve customer problems, as well as how innovation will help grow adoption, will give insight into the potential growth of a cryptocurrency. While some of the technical aspects may be too complicated to grasp, the cryptocurrency white paper or website should be able to explain the solution in plain language that is easy to understand.

6. Understand the Vision

Cryptocurrencies should have a clear vision of what goals they are setting out to accomplish, with an established road map of how they will get there. This should be readily available in the crypto white paper, as well as on the company website. The vision of a crypt project should give enough details for investors to understand what problems they are solving, as well as the potential user base for their solution.

If a company website states simple axioms such as “cryptocurrency is the future” but cannot define or articulate a clear vision for how the cryptocurrency solves a specific user problem, this is a red flag.

7. Review the Road Map

The company road map of a cryptocurrency is a time line of events that shows the expected progress of the project. Typically shown on a line graph, the road map should have clear and concise milestones broken down on a quarterly basis, all moving the project toward a predefined set of goals.

The road map may be available in the white paper, though most crypto project time lines are ever-changing and are listed on the company website. If there is no defined road map, or if the milestones are too generic, this is a red flag.

8. Research Reputation

There are tens of thousands of cryptocurrencies, and unfortunately, some of them are scams designed to get the founders (and early investors) rich. Researching the reputation of the team and leadership of a cryptocurrency can help investors understand if the crypto project is reputable or not. 

There are several places to learn about the reputation of a cryptocurrency project, from Reddit forums to Discord channels and social media accounts. Ask around these online communities to get a feel for the industry reputation of key leaders on the project, as well as the perception of that project. If there are lots of negative responses to questions about a key leadership member or the project as a whole, this could be a red flag.

2 Technical analysis

Technical analysis methods evaluate crypto markets and identify trading opportunities through price trends and patterns seen on charts. They are based on the belief that a crypto's past trading activity and price changes are valuable indicators in determining future price and activity.

Crypto Sentiment Analysis via StockGeist.ai Crypto sentiment is defined as the crowd psychology towards the cryptocurrency market. Traders and investors can utilize crypto sentiment analysis as an important factor in predetermining price movements.

The importance of crypto market sentiment analysis

Crypto sentiment analysis should be an integral tool to any trader and investor for deciding whether the time is right for investment or selling a commodity. Although, crypto market sentiment analysis should be used in conjunction with other methods of analyzing market trends of digital currencies such as: 

Analyzing a token’s whitepaper - The whitepaper contains the main aims of the projects and use cases for that token. Investors and traders alike will try to ascertain whether the outlined goals are realistic and achievable, as well as ensuring the whitepaper is not similar to an existing token.

What major problem is the token solving? 

Determining the solution a particular token is providing will help highlight the utility value of a token’s market value. For example, blockchain projects that uniquely solve a major problem will have a higher demand, therefore elevating the tradable value of the token.

Projects social media following - Discover how the team is running each of their social media profiles. A good token will successfully be gaining popularity or noise amongst a huge following and capatilizing on viral opportunities that present themselves. This will also inform you more about the project to make informed decisions.

Previous price history - Can you spot any trends in the price shifts over time and can these be linked to any specific events which may or may not occur again? An extremely volatile price value will either put traders and investors off, or provide an opportunity for experienced traders to take advantage of any future price shifts which appear to mirror previous movement.

Team behind the project - You want to back a token that is being supported by a group of funders who believe wholeheartedly in the project. The fundamental analysis of the team members is important to determine whether the token is in capable hands. Traders may investigate whether they have worked on related projects in the past? Are they members of the blockchain ecosystem? Qualifications?