Fundamental analysis is aĀ framework that aims toĀ identify the "true" value of anĀ asset. Fundamental analystsĀ study economic and financialĀ factors to figure out if theĀ market's valuation of an assetĀ is fair. Those factors could beĀ macroeconomic factors likeĀ the state of the globalĀ economy, the overall industry condition, or businesses connected to theĀ asset (if there are any).Ā Again, the goal here is to establish whether an asset is undervalued orĀ overvalued. Suppose that Alice rigorously studies a cryptocurrency āBobcoin ā which trades for $10. But Alice's findings indicate that the assetĀ should actually be worth $20. In this case, she might decide to buy lots ofĀ Bobcoins as she believes that the market will eventually value them atĀ $20.Ā On the topic of cryptocurrency-specific fundamental analysis, it's worthĀ noting that some consider on-chain metrics when conducting theirĀ research. On-chain metrics is an emerging field of data science. It isĀ concerned with data that can be read from public blockchains: networkĀ hash rate, distribution of funds, the number of active addresses, etc. ByĀ taking this abundance of public information, analysts can createĀ sophisticated indicators that measure the network's health.Ā Fundamental analysis is popular in the stock markets, but it's perhaps notĀ very suitable for cryptocurrencies in their current state. The asset class isĀ so new that there simply isn't a standardized, comprehensive frameworkĀ for determining market valuations.Ā Ā What's more, much of the market is driven by speculation and narratives.Ā As such, fundamental factors will typically have negligible effects on theĀ price of a cryptocurrency. However, more accurate ways to think aboutĀ crypto asset valuation may be developed as the market matures.Ā
Want the low-down on fundamental analysis?  Check out the Binance Academy article: ⬄ What is Fundamental Analysis (FA)? ⤠bit.ly/AcademyEBook1
**P2P Scams Alert** **Scam Details:** Fraudulent sellers might ask you to cancel your order after you've made the payment, citing a "system error" that prevents the automatic release of USDT. They assure you that they will manually unlock the USDT or refund your money once you cancel the order. However, cancelling the order results in losing your money without receiving any USDT. **Result:** Financial loss and no USDT received. **Tip:** Never cancel the order after payment. Stay safe! #Write2Earn! #P2PScamAwareness #P2PScamWarning #BinanceTournament #Megadrop #MtGoxJulyRepayments #ETH_ETFs_Approval_Predictions #VanEck_SOL_ETFS Disclaimer: Includes thrid-party opinions. No financial advice. May include sponsored content.Ā See T&Cs.
You might hear people talking about trading financial instruments, but youĀ might also hear them talking about investing in them. The aim in both ofĀ these activities is similar (let's make some monaaay!), but they'reĀ somewhat different in their methodologies.Ā When you invest in something, you're hoping to get a return on thatĀ investment āĀ the goal is to get back the money you put in, plus someĀ more. For example, you could buy a run-down fast food restaurant forĀ $100,000, fix it up, and try to resell it for $500,000 in a few years. Youcould also buy a stake in a small startup, believing that the stake will beĀ worth a lot more when the business grows.Ā But wait, we hear you ask, isn't that what traders do? Not quite. Yes, aĀ trader might buy shares in a business, but they're playing on a shorter timeĀ frame. Traders frequently enter and exit positions to generate smallerĀ returns over a number of trades. Investors, on the other hand, generallyĀ take a more passive approachĀ ā they invest capital into ventures or assetsĀ that are likely to generate a larger profit on a longer time frame.Ā But how do you decide what to buy and sell? You might get lucky randomlyĀ picking stocks and flipping a coin to decide whether to buy or sell them,Ā but it won't net you consistent returns. Most traders instead conduct someĀ form of analysis to decide what moves to make next. Broadly, the types ofĀ frameworks used can be broken down into two categories ā fundamentalĀ analysis and technical analysis. Let's talk about those.Ā
It's probably wise to kickĀ things off with aĀ definition of the topicĀ we'll be discussing. AĀ staple of economics,Ā trading simply refers toĀ the buying and selling ofĀ assets. When you buyĀ your groceries at theĀ local shop, that's a trade. When you exchange your old PC for a new gameĀ console, that's a trade. We could go on forever here. To cut a long storyĀ short, any activity where you give something to someone in return forĀ something else is a trade.Ā This principle really extends to the financial markets. You trade financialĀ assets like stocks, bonds, Forex pairs, options, cryptocurrencies, etc. Don'tĀ worry if you don't know what any of those are yet. By the end of this book,Ā you'll be an expert!Ā
What is investing?Ā
You might hear people talking about trading financial instruments, but youĀ might also hear them talking about investing in them. The aim in both ofĀ these activities is similar (let's make some monaaay!), but they'reĀ somewhat different in their methodologies.Ā When you invest in something, you're hoping to get a return on thatĀ investment āĀ the goal is to get back the money you put in, plus someĀ more. For example, you could buy a run-down fast food restaurant forĀ $100,000, fix it up, and try to resell it for $500,000 in a few years. YouĀ 5 #written2earn