10 Ways to Conduct Effective Fundamental Analysis

Zebpay
4 min readJun 3, 2024

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What is fundamental analysis in crypto?

You can determine the intrinsic value of crypto projects using fundamental analysis. Evaluating certain essential factors can help you determine if the crypto is overvalued or undervalued. Undervalued crypto is ideal for investment, whereas overvalued assets may indicate taking profits.

Crypto markets are known for being volatile and established tokens like Bitcoin experience sudden fluctuations in their value. Newer crypto tokens are even more risky to invest in, and you need to understand their fundamentals to make the right investment decision. Fundamental analysis can help you invest in or trade crypto with confidence. It can help you create an informed investment strategy to make profits.

How to do fundamental analysis in crypto?

Crypto fundamental analysis aims to make informed investment decisions by determining if the asset is overvalued or undervalued. You can gain a better understanding of a crypto project by conducting a fundamental analysis. This article has listed some essential factors to consider for crypto analysis.

1) Assess the development team.

It is essential to check the history and experience of the development team for the project. You should assess the communication channels used by the team to check for updates. A good team will have a history of completing milestones to achieve success in their past projects.

2) Read the whitepaper.

It is essential to read the whitepaper of any potential crypto project that you want to invest in. It gives an overview of the project, its goals, and its plans. It also has information on the technology used, a roadmap for upgrades, use cases, and distribution and supply schemes for its tokens. It is also vital to check this information with the discussions around the project to see if the goals are realistic.

3) Tokenomics

The total supply, circulation, and distribution of a crypto token are known as its tokenomics. It is a vital factor to evaluate as it affects the price of the crypto token over time. There are three crucial data points to review: circulating supply, total supply, and maximum supply. The current supply of crypto in the market is referred to as its circulating supply. The total supply is determined after all tokens are distributed and unlocked. The maximum amount of crypto tokens that will ever be produced as many platforms allow minting new tokens.

4) Market opportunities

Even the most innovative crypto project will fail with no demand for its service. So you need to analyze the market that the project is looking to target. This includes studying potential use cases, market penetration, and regulation.

5) Understand the community

Evaluate the number of users in the community of a project and their engagement levels. An active and growing community is a good indicator of the potential of a project. A crypto project is more likely to succeed if it involves the community in decision-making. Additionally, if the community is active and engaged during live events and discussions. You can observe how users feel about the project through various social media platforms to understand its community. A good-potential crypto project receives a lot of hype and support online.

6) Roadmap

The roadmap of a project consists of a timeline of events that shows future upgrades and development. The road map is usually a line graph that has simple quarterly milestones. The team makes progress if it achieves these milestones on time.

7) Evaluate the security of the project.

Look for potential security vulnerabilities and precautions taken by the project. Evaluate the source code of a project to understand its vulnerabilities. If you are not a developer, consult a professional to analyze the security of the crypto project.

8) Review price history

The crypto market is known to be volatile, as tokens experience wild price swings in a short period. Analyze the price history of a crypto token to see how it has evolved. Check out the news and factors that influenced wild price swings. It can help you determine if the crypto project is growing or going to go bust.

9) Research project partnerships

A crypto project could have different types of partnerships, such as commercial or technological. It is vital to evaluate the type of partnership and how it affects the project. Evaluate the credibility of the partner to see if they are well-known or have a track record of successful partnerships.

10) Monitor crypto news and updates.

Fundamental analysis in crypto is not a one-time process, and you must stay updated about the latest developments in the project. Evaluate how a project reacts to a market event and the corrective measures to address the change.

Conclusion

The crypto market is highly volatile, making it difficult to analyze a potential crypto project. Conducting a fundamental analysis can help you come close to finding the true value of a crypto project. It is essential to conduct a thorough analysis of the above-mentioned factors to determine if the crypto asset is overvalued or undervalued and make wise crypto investment decisions.

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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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