[How To] Fundamental Analysis For Crypto-Assets; Cheat Sheet

[How To] Fundamental Analysis For Crypto-Assets; Cheat Sheet

Not only in a bear market, but also to minimize the risk of falling victim to a scam, you should make a fundamental analysis before every investment.

You are just shaking your head? 'Make a what ..??'

Wikipedia's definition of 'fundamental analysis' is as follows:

"Fundamental analysis is a form of financial analysis. It tries to determine the fair or reasonable price of securities ("intrinsic value"). In contrast to chart analysis, it is not based on an analysis of price trends, but on economic data and the economic environment of a company, the so-called "fundamental data".

The fundamental analysis of crypto-assets differs somewhat from the analysis of securities, as companies can draw on concrete figures, e.g. annual reports, and draw conclusions from capital flows.

Fundamental analysis is an active process that costs time if it is carried out appropriately. There are many aspects that need to be considered to determine how the price of a crypto asset could develop over time. However, it differs considerably from the analysis of cryptocurrencies and tokens. As these are not companies, there are no annual reports with reliable key figures.

  • The value of a cryptocurrency such as Bitcoin comes primarily from the confidence of the community, comparable to conventional currencies such as dollars or euros.
  • The value of a utility token is significantly determined by the usage possibilities and the number of users.
  • New types of security tokens (STOs), DAO, in which you can participate directly in the success of a 'company' under certain circumstances, are an exception to this rule.

Since cryptocurrencies represent a new asset class in the initial stage, it is also difficult to compare them with existing projects, since these themselves are only a few years old and do not allow a reliable comparison.

In the following a little fundamental analysis 'cheat sheet'; for beginners, as well as for some advanced people. It is not meant to be 'complete', does not include indicators such as NVT or MVRV, or other models; but rather to give an easy step-by-step guide for three different levels (quick, normal, big FA):

Quick Fundamental Analysis

Normal Fundamental Analysis

Big Fundamental Analysis