December 7, 2022

9 Elements of Fundamental Analysis For Cryptocurrency Investment

Compared to other investment products, crypto assets have high volatility. The price of crypto assets is determined by 100% of the market, and the market goes up and down very quickly. However, investors, especially beginners, can choose which assets to buy through crypto fundamental analysis.

Initially, the term fundamental analysis was known in the stock world. Fundamental analysis is generally an analytical method used to assess a company’s financial position and determine the security of the value of a stock. This is usually done by looking at the company’s financial factors and economic conditions related to return on equity (ROE) indicators, price-earnings ratio (P / E), and so on.

With the rise of crypto assets, investors will rely on fundamentals as well as technical analysis. However, in crypto fundamental analysis, the approach is similar to that used in traditional financial markets, but you cannot actually use it to value crypto assets.

What is Cryptographic Fundamental Analysis?

Jakarta, Gizmology-Cryptocurrency assets have high volatility compared to other investment products. The price of crypto assets is determined by 100% of the market, and the market goes up and down very quickly. However, investors, especially beginners, can choose which assets to buy through crypto fundamental analysis.

Initially, the term fundamental analysis was known in the stock world. Fundamental analysis is generally an analytical method used to assess a company’s financial position and determine the security of the value of a stock. This is usually done by looking at the company’s financial factors and economic conditions related to return on equity (ROE) indicators, price-earnings ratio (P / E), and so on.

With the rise of crypto assets, investors will rely on fundamentals as well as technical analysis. However, in crypto fundamental analysis, the approach is similar to that used in traditional financial markets, but you cannot actually use it to value crypto assets.


Cryptographic fundamental analysis is the approach used by investors to establish the “intrinsic value” of an asset. By examining some internal and external factors, the main purpose is to determine if an asset or business is overvalued or undervalued. Investors can then use that information to strategically enter and exit investment positions.

As mentioned above, crypto assets cannot be seen through the same lens as traditional assets. Fundamental analysis of equities and cryptography is different. In the crypto asset market, there are several factors that can be used as a fundamental analysis of crypto assets. Even more decentralized mainstream tokens like Bitcoin (BTC) are close to commodities. Therefore, we need to pay attention to another approach.

First step before doing fundamental analysis

To perform basic cryptanalysis, you need to understand how they are evaluated. There are several things to consider before deciding to invest in crypto assets.

  1. Research

Oscar Darmawan, CEO of Indodax, advises beginners to do some quick research first before investing in crypto assets. This process aims to proactively understand the investor’s risk profile and obtain information about the crypto assets to purchase.

“For novice investors, we recommend buying Bitcoin and Ethereum first, as both cryptocurrencies have the highest market capitalization, except for the two cryptocurrencies. If you want to buy, investors are expected to be able to go through the research process in the form of a search first, “he said.

The process of investigating the problem is to proactively find the crypto assets to buy through the website. Not only that, the problem investigation process also means looking for information on crypto investment and blockchain technology details.

  1. Screening

Next, the screening process. The screening process is divided into two parts. The first is to filter the crypto assets to buy from several crypto assets selected during the research process. The second screening process is the screening of each risk profile.

“It’s important to understand that investors entering cryptocurrencies are not investors with a conservative risk profile, as we know that cryptocurrencies have very fast ups and downs. Therefore, anyone who wants to invest in crypto is better off with an offensive or moderate offensive risk profile, “Oscar added.

Aspects that can be a fundamental analysis of crypto assets

After conducting a mini-research and screening process, investors can perform technical and basic cryptanalysis. Technical analysis is an analysis process that examines and analyzes past movements in cryptocurrency prices in the past. Fundamental analysis, on the other hand, looks at all the financial information and technology behind it.

In the crypto asset market, there are several factors that can be used as a fundamental analysis of tokens.

  1. Market capitalization

The first factor that needs to be a benchmark is to look at market capitalization. This is the value or price of a crypto asset calculated from the total number of assets in circulation. Market capitalization is certainly an important indicator as it shows market interest and the growth of the crypto itself.

Investors can access CoinMarketCap or CoinGecko to view information about the capitalization of crypto assets. These are the two major sites referenced by crypto investors. Includes CoFTRA, which first looked at the 500 coin market capitalization ranking and selected 229 crypto assets.

After considering market capitalization, look at the security aspects, the profile of the team and team members who developed it, the governance of the blockchain system, the scalability of the blockchain system, and the roadmap that describes the development of the blockchain system. .. A plan that can be verified.

2. Supply mechanism


The coin or token supply mechanism is one of the interesting things from an investment perspective. Maximum supply, cyclical supply, and inflation can be the basis for decision making. Asset availability can be measured by the supply of tokens. Supply is related to supply and demand.

Some coins use the token burn mechanism to reduce the number of new units they generate over time. If the demand is high but the supply is low, the price will be high, and the willingness to buy the price of crypto assets will increase.

  1. Liquidity and trading volume

Liquidity is a measure of how easy it is to buy or sell an asset. Therefore, liquid assets are assets that can be sold at their transaction prices without problems, and the market is fiercely competitive, flooded with demand and bids.

Trading volume is a useful indicator of liquidity. This can be measured in several ways, which are usually displayed in the form of trading volume charts. Its function is to show how much value was traded in a particular time period.

Liquidity is useful for crypto fundamental analysis, which serves as an indicator of market interest in future investments.

  1. Developed project

Cryptocurrency investors need to find out if a project created by a coin developer can provide a solution to the problems that arise from traditional assets in order to bring new economic value.

The basic analysis of cryptography here is to see what solutions we can offer. Once the project is implemented, it can create value. Therefore, it is important to determine if the token is actually being used. And whether the utility is recognized by the wider market and how likely it is.

  1. Development team

You also need to consider knowing the people behind the project. According to Jericho Biere, R & D manager at ICDX Jericho, Bisnis.com reports that the development team is an important aspect as it concerns the sustainability of the crypto assets themselves. “[Observe] who the founders are, what the program is, and what interests they have in developing the project,” he said.

  1. White paper

If the capital markets are known as prospectuses, crypto assets have white papers or roadmaps for observing the development of token projects. The white paper itself is a report that includes background, the founder of the crypto project, what the market looks like, the purpose of creating the crypto, future plans, the use of funds, and the amount of crypto.

Here, investors can find a roadmap for crypto assets that describes potential obstacles and asset security, what is created and what is done. To view information about crypto assets and white papers, investors can visit the official website of crypto assets.

  1. Community

Unlike other assets, the community is one of the most important elements of crypto assets. You can drive the projects that your development team runs. Through the community, investors can see an interest in coins. Investors can observe if there are many other investors collecting crypto assets.

Investors can track the innovations that tokens generate from their projects’ social media activities, as well as events that will take place some time ago and in the future.

  1. Listed on many exchanges

The next important thing that is the easiest to know the reputation of crypto assets is to be listed on many exchanges. This is because the number of tokens on the market can actually reach tens of thousands. However, only 229 are recognized by CoFTRA for transactions on local crypto exchanges.

There are many so-called mycin coins and junk coins in the crypto community. This is something crypto investors should avoid. Such tokens usually do not have strong fundamentals and are only present in “fried” or “pompon” influencers.

  1. Market sentiment

Finally, what you shouldn’t miss is knowing the sentiment of the market. As in the equity world, investors need to actively monitor news about digital asset projects, whether the tone is positive or negative. In addition, government policies and certain events in the news often affect the price of crypto assets. Therefore, you can decide when it is best to invest.

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