CoinW Guide| How To Perform Crypto Fundamental Analysis
Dear user,
Are you a newbie in the Crypto space and intend to invest in cryptocurrencies, but don’t know how?
Have you heard of Fundamental Analysis of crypto projects before investing in cryptocurrencies, but don’t know exactly where to start from?
If you are among any of the stated groups, you have nothing to worry about, as in this short piece, we will show you how to conduct crypto fundamental analysis in simple steps.
Trading assets as volatile as cryptocurrencies involves key metrics; Selecting a trading strategy, understanding the trading ecosystem, and mastering technical and fundamental analysis.
Fundamental analysis is a method used by investors to determine the intrinsic value of an asset or business. This is aimed at determining whether the business or asset is overvalued or undervalued.
Crypto Fundamental Analysis metrics include on-chain metrics, project metrics and financial metrics.
•On-chain Metrics: This involves checking the transaction amount, transaction count, hash rate, amount staked, fees paid and active addresses associated with a crypto currency project.
• Project Metrics: The On-Chain Metrics might be technical , involves deep calculations and DYOR( Do Your Own Research) might be difficult with the on-chain metrics. However, the Project Metrics, is more easier, understandable and makes DYOR less technical.
Project Metrics analysis include:
-Reading the White paper of a project: A whitepaper is a technical document that gives a detailed overview of a cryptocurrency project.
A good Whitepaper should tell you the following:
•The technology used for the project.
•The use cases of the cryptocurrency. What does the project aim to cater for.
• A workable roadmap.
• The supply and distribution scheme for the coin or token.
Ensure you verify information. Ask co-investors if possible.
- The Team: Who are the team behind the Project? Do they have the capacity to ensure the sustainability of the crypto project? What are their experiences and skill? What do their developer community look like? If the Project has a public GitHub, then check that out!
- Competitors: it is important to find out a project’s competitors, compare project with competitors roadmap, use cases, etc.
- Tokenomics and Initial Distribution: Determine whether a token has real utilities, will it be appreciated by the market? How is the resultant utility measured? In simple words, are the solutions offered by the project really solving the problem?
Close to this, is to find out how the funds were initially distributed. Was it via an ICO (initial coin offering) or IEO( initial exchange offering)? Will users earn by mining? How much is reserved for founders and team? How much is left for investors? Did any pre-mining activity occur?
These analysis helps you detect the risks associated with a project. For example, if the majority supply of token is held in hands of a few, investing in such token is a risky entry, as manipulation of market by the few holders is highly possible.
•Financial Metrics:
This involves the following:
- Market Capitalisation: Also known as network value. This involves multiplying circulating supply of a token by its current price.
- Liquidity and Trading Volume: Liquidity, is a measure of how easily an asset can be bought or sold. A liquid asset is one that has no problem of being sold at its trading price.
The Illiquidity of a token, means that it cannot be sold at a fair price. That is a negative indicator. As an investor, faced with an illiquid asset, has to either wait for a time an asset is liquid or lower the ask. This is not a good situation for any investor.
Trading Volume helps to determine an assets’ liquidity. This is mostly displayed in charts.
- Supply Mechanism: Very fundamental, is a project’s supply mechanism. Check out the token’s maximum supply, circulating supply and how the token reacts to inflation.
And finally, ensure that you are not acting rashly. Safely invest and minimize risk and for us at CoinW Exchange, we won’t relent on ensuring that only safe and investment-worthy assets are listed for trading.
About CoinW Exchange:
CoinW is a world-class reliable cryptocurrency exchange and trading platform, established in 2017, providing financial services in over 120 countries and headquartered in BVI. CoinW offers Spot, Futures and other services to more than 7 million users worldwide. The trading platform, has 12 local trading centres in 8 countries and supports three languages; Chinese, Korean and English. The exchange also supports 304 cryptocurrencies and 353 trading pairs.
The core team members of the platform are early crypto investors, and the technical team of CoinW consists of members who have gathered quality experience working with A-list companies like Alibaba, Oracle, Google, and major players in the financial securities industry, with rich experience in high-frequency trading, asset management, security protection, and underlying architecture development.
CoinW insists on selecting high-quality crypto assets for investors, providing a seamless trading experience for traders, creating new models of technology and finance for users, and becoming a major leader in the cryptocurrency and financial service industry. CoinW offers bespoke financial services and leverages the prospects of cryptocurrencies and digital assets.
CoinW provides users with one-stop cryptocurrency financial services and trading options, such as spot trading, contract trading, ETF, margin, OTC, and overall asset management. The platform adheres to its core values which are; Innovation, Quality service, Wealth creation, and Transparency.
CoinW’s exchange and trading platform enlists mainstream and investment-worthy cryptocurrencies (BTC, ETH, HC) and other assets. The platform offers a well-secured, convenient, transparent, and quality trading experience.
Latest Highlights: As part of CoinW’s penetration in the African continent, CoinW Africa maintains its stance on contributing to the growth of the African community as recently the exchange launched a welfare program, kick-starting with a visit to the Living Fountain orphanage in Lagos, Nigeria, donating food supplies and safety materials and kits to children in the orphanage. This led to a commendation and warm recognition by the African community. This news also made the top trends in the Nigerian Twitter space.
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