Fundamental analysis is a way to assess the value of an asset (e.g., cryptocurrency, stock, or company) based on examining its fundamental characteristics, not just its price. Its goal is to understand whether the asset is overvalued or undervalued and to use this information to make buying or selling decisions.

How does fundamental analysis work?

Fundamental analysis helps answer the questions:

What underlies the asset? Does it have growth potential? What factors may affect its price in the future?

For cryptocurrencies, it includes studying aspects such as:

📌Technology:

How is the cryptocurrency structured? Does it have unique features? For example, BTC has a limited number of coins, while ETH has smart contracts.

📌Team:

Who is developing the project? If experienced developers or well-known entrepreneurs are behind the cryptocurrency, it can be a plus.

📌 Partnerships and integrations:

Is the project working with large companies or governments? For example, if a cryptocurrency is used in real business processes, it increases its value.

📌Market demand:

Is there interest in the cryptocurrency? For example, if it is used in DeFi, NFT, or other popular sectors, this may affect its price.

📌News and events:

Plans for updates, listings on major exchanges, changes in cryptocurrency laws—all can significantly impact the price.

❗️ Example of fundamental analysis

Suppose you are studying the cryptocurrency Cardano (ADA):

Technology: Cardano uses a Proof-of-Stake algorithm, which is more energy-efficient than the Proof-of-Work used by BTC.

Team: The project is led by Charles Hoskinson, one of the co-founders of ETH.

Partnerships: Cardano actively collaborates with governments and educational institutions.

News: The upcoming network upgrade promises to improve its performance and scalability.

Market demand: An increasing number of projects are being launched on Cardano, indicating growing interest.

If you believe this information shows high growth potential, you may decide to buy ADA.

What is the difference from technical analysis?

💡Fundamental analysis: Assesses what lies behind the asset (technologies, team, demand). This is a long-term approach.

💡Technical analysis: Studies charts and price movements. It is more suitable for short-term trading.

🔖 Advantages of fundamental analysis

1. Helps to understand the true value of the asset.

2. Suitable for long-term investors.

3. Provides the opportunity to find undervalued projects with high potential.

🔖 Disadvantages

1. Requires time and knowledge.

2. The market may behave differently than analysis suggests. For example, even a promising project can lose value due to panic or bad news.

3. In cryptocurrency, it is often difficult to assess real data since the market is still young.

Fundamental analysis is the foundation for those who want to understand what they are investing in. It is especially useful for long-term investors looking for projects with real value rather than just chasing temporary trends.

#analysis #Traiding #Binance #currency $BTC