Fundamental analysis is one of the key tools for asset evaluation, used in both traditional and cryptocurrency markets. Unlike technical analysis, which focuses on charts and patterns, it helps to understand what underpins an asset's value: from financial metrics of the project to the macroeconomic situation.
What is fundamental analysis: essence and significance
Fundamental analysis is a method of asset valuation through the study of economic and financial indicators. For participants in the crypto industry, it helps to understand whether a token has real value and potential for growth. Fundamental analysis can be simply explained as an attempt to 'look beyond the price tag' of an asset, to determine its economic base, prospects, and opportunities.
Unlike technical analysis, which focuses on charts and historical prices, the fundamental approach considers the state of the economy or market as a whole, demand, the potential of the offered technology, financial metrics of the project, development activity, and other indicators.
For example, if a company publishes a report with earnings above expectations, it may lead to a rise in its stock — investors perceive this as a signal of strong prospects. Conversely, weak indicators can lead to a drop in price. In the crypto market, the same principles apply, but with the assessment of other factors — the development of new technology or strategic partnerships.
Key indicators of fundamental analysis
The fundamental approach allows assessing the 'real' value of assets, whether they are company stocks or digital tokens. For this, a whole set of metrics reflecting the financial condition of the project or issuer is used. Key indicators of fundamental analysis include:
P/E (price-to-earnings ratio) is one of the most common indicators in the stock market. It shows how much investors are willing to pay for each dollar of the company's profit. A high value indicates expectations for future growth, while a low value may indicate undervaluation of the shares or financial problems of the project;
EPS (earnings per share) reflects how much profit is distributed per share. It allows assessing the stability of the business and its ability to generate income, which is especially important for dividend investors;
revenue — total income of the company from core activities. Stable revenue growth indicates high demand for the product or service and a strong position in the market;
D/E (debt-to-equity ratio) reflects the ratio of borrowed and owned funds. A high value means that the company actively uses borrowed financing, which can increase risks for investors.
Fundamental indicators of a company can be found on resources like Yahoo Finance, Bloomberg, or Morningstar, which provide access to financial reports and analytics.
Example: the P/E ratio for Tesla in April 2025 is 126.42 — investors pay $126 for each dollar of profit. This reflects high expectations regarding the company's future and its technological innovations. At the same time, Ford's metric is 5.08, and General Motors' is 4.45, indicating lower growth expectations compared to Tesla.
In the crypto industry, the main indicators of fundamental analysis are the number of network users, product quality, news about project development, developer activity, and information about new partnerships. These parameters allow assessing demand, dynamics, and potential of a specific token.
Fundamental analysis of stocks and companies: how it works
Fundamental analysis of stocks includes several key stages, each of which helps to better understand how stable, promising, and capable the company is to grow under current market conditions.
Macroeconomic analysis
Study of the global and local economic conditions in which the company operates. This includes inflation, central bank rates, the national currency exchange rate, unemployment levels, and fiscal and monetary policies. These factors set the overall background and can significantly impact the business even of the largest players. For example, an increase in the key rate suppresses consumer activity, while a sharp devaluation of the currency can reduce demand for imported products.
Industry analysis
Assessment of the sector in which the company operates. This includes studying trends, evaluating growth rates, saturation levels, competition, and entry barriers. For example, if the industry is mature and highly competitive, a new or small player has less room for expansion without a unique product or aggressive marketing strategy.
Financial analysis
Detailed study of the already mentioned metrics: profit, revenue, profitability, debt load level, capital expenditures. These indicators help to understand how effectively the business operates and whether it can scale. Stable cash flow and low debt burden are signs of resilience, especially in unstable market conditions.
Innovative potential
One of the most important stages of evaluation, especially for technology companies. Here, investments in research and development, the presence of patents, technological breakthroughs, unique solutions, and the pace of new product implementation are considered. Apple is the best example for fundamental analysis of American stocks. Due to constant product improvements and the creation of new device categories, the company maintains audience interest and increases market capitalization.
Competitor analysis
Company stock analysis also includes evaluating the strengths and weaknesses of other players in the same segment. This is necessary to understand the position of the target company within the industry. For example, Apple and Samsung are two tech giants competing in the smartphone segment. Despite a similar range of products, their approaches to design, marketing, and ecosystem differ. It is also important to compare brand recognition, customer base, sales channels, and business model.
Information background and expectations
External events can play a key role. The publication of a quarterly report, the announcement of new products, rumors about mergers, or leaks of information can all influence quotes in the short and medium term. Positive news can trigger a rise, while negative news can crash quotes. Stocks of high-tech companies and tokens of blockchain projects are especially sensitive to this.
Thus, qualitative fundamental analysis is not about a set of formulas and ratios, but rather about a comprehensive approach that helps the investor see the whole picture: from the state of the global economy to the nuances of management within a particular project.
Application of fundamental analysis in different markets
Fundamental analysis can be applied to various asset classes, but depending on the market, the emphasis and priority metrics will change. This is related to the different nature of assets: while in stocks, the business model and reporting play a key role, in cryptocurrencies, the community and technological implementation take center stage. Let's consider the specifics of the approach in each direction.
Stock market
Fundamental analysis of the stock market can be referred to as 'classical'. Here, investors study the intrinsic value of the company to understand how much the current stock price corresponds to its real potential. This approach is relevant for those who are focused on long-term investments and cannot rely solely on volatility or technical analysis.
In practice, analysis is built around four key parameters:
earnings per share;
price-to-earnings ratio;
debt burden;
free cash flow.
Based on this data, one can draw conclusions about the profitability of the company, the stability of its model, and the feasibility of investments. Such an approach works especially effectively in conjunction with sector analysis and macroeconomic conditions.
Foreign exchange market (Forex)
Fundamental analysis of foreign exchange markets is used to assess supply and demand on a national scale. Exchange rate dynamics often depend not on private players, but on decisions made by regulators and global macro processes. Traders primarily track:
actions of central banks;
inflation rates;
economic statistics;
political stability.
This analysis allows understanding which currency will be more attractive under the current or expected economic background. It does not replace the technical approach but answers the question of 'why' the market moves in one direction or another.
Cryptocurrency market
Cryptocurrencies are a rather specific category of assets that requires a somewhat different approach. There are no reports and income indicators in the usual sense, and access to many data points is partially or fully restricted. Instead, fundamental market analysis includes project dynamics, demand for their product, and resilience in a volatile environment. Key benchmarks remain:
user activity;
technical development;
tokenomics;
market and technological partnerships.
These parameters form an understanding of the maturity of the project, its relevance, and growth potential. Unlike traditional markets, community sentiment and reaction to news also play an important role. Therefore, analysis in the crypto industry must always consider both 'numbers' and context.
How to start using fundamental analysis: tips for beginners
For a novice investor, fundamental analysis may seem complex and overloaded with terms. But in practice, the methods of fundamental analysis are among the most logical and consistent, and can be mastered without significant trading or investment experience. Here are some tips that will help beginners learn this method more quickly.
Gather basic information
When it comes to the stock market, start by studying the financial reports of companies: pay attention to profit, net income, debt, and profitability. This data can be found in annual reports, quarterly statements, or on platforms like Yahoo Finance and Google Finance.
In the case of crypto projects, the main focus should be on the activity of the development team, community engagement, updates on GitHub, media presence, and tokenomics. It is important to understand how 'alive' the project is, whether it is technically supported, and how transparent it is in communication.
Compare the obtained data with competitors
Do not analyze an asset in a vacuum — its effectiveness is always determined by context. If it is a stock, look at the metrics of similar companies in the industry. If it is a blockchain project, study other products in the same category — for example, other L1 or DeFi protocols. Compare their user metrics, volumes, number of partnerships, and media support. This will help to see how strong the asset's position is in the market and whether it has a chance to stand out.
Master the tools that simplify analysis
Instead of searching for data manually, use aggregators. For stocks, services like TradingView and Yahoo Finance are suitable, while for cryptocurrencies — DefiLlama, Dune, Cryptorank, and others. It is worth mastering gradually — starting with simple dashboards and charts, and moving on to deeper data slices.
Follow the news and expert assessments
Often, it is information from specialized media, interviews with founders, or analyst comments that help understand the prospects of a project or company. Subscribe to reliable sources, including industry Telegram channels, team blogs, and well-known users.
And most importantly — start simple. It is better to choose one clear project or company and go through all stages of fundamental analysis than to spread yourself thin on dozens of assets. Large companies or projects with transparent structures and long histories are an excellent start for practice.
