How to carry out a fundamental analysis for cryptocurrency
The world of cryptocurrency has grown exponentially in recent years, and millions of people around the world invest their hard -earned cash in this digital wealth class. While many investors of cryptocurrencies with high returns and the potential for quick growth are drawn, a more nuanced approach to investment is often recommended. Such an approach is a fundamental analysis in which the underlying economy, market trends and technological progress of a cryptocurrency are examined before an investment decision is made.
What is a basic analysis?
A fundamental analysis is the process of analyzing a company or a financial value based on its inner value, its annual financial statements, industry trends and other relevant factors. In the context of the cryptocurrency, the basic analysis includes the evaluation of the underlying economic industry of a cryptocurrency, such as: B. supply and demand, mining costs, transaction fees and adoption rate.
Types of basic analysis
There are different types of basic analyzes that can be applied to cryptocurrencies:
- Price-to-renewal (P/E) ratio : This metric compares the price of a cryptocurrency with its profit per share. A higher P/E ratio can indicate an undervaluation.
- Analysis of financial authorization : The review of the balance sheet, a profit and course of cryptocurrencies and the cash flow declaration can provide insights into your financial health.
- Market capitalization (market capitalization) Analysis
The comparison of the market capitalization of a cryptocurrency with the similar assets can help to assess the relative size and growth potential.
- Analysis of the adoption rate : Assessment of the adoption rate of a cryptocurrency, including participation by institutional investors, retail dealers and other interest groups, can provide insights into scalability and usability.
- Regulatory analysis : Investigation of regulatory developments in connection with cryptocurrencies, such as B. Procedure of the government or new regulations can influence the market mood and prices.
How to carry out a fundamental analysis for cryptocurrency
To carry out a basic analysis of cryptocurrency, follow the following steps:
- Research the cryptocurrency : Learn more about your underlying economy, technological advances and market trends.
- Check the annual financial statements : Analyze the balance, explanation and the cash flow declaration of a cryptocurrency to evaluate financial health.
- Rate the market capitalization : Compare the market capitalization of the cryptocurrency with the similar assets to evaluate the relative size and growth potential.
- Assessment of the adoption rate : Rate the adoption rate of cryptocurrency, including participation by institutional investors and retail dealers.
- into account regulatory developments : Investigation of regulatory developments in connection with cryptocurrencies and their potential effects on the market mood and prices.
sample analysis
Let us consider a sample analysis from Bitcoin (BTC):
* Price-to-of-of -Oferings (P/E)-ratio : BTC deals with a P/E ratio of 20, which indicates an undervaluation.
* Analysis of financial authorization : Checking the balance of Bitcoin, the profit and loss account and the cash flow declaration shows a significant increase in mining costs last year, which can affect profitability.
* Market capital (market capitalization) Analysis : The comparison of BTC with similar assets shows that they have a market capitalization of around 50 billion US dollars, while many other cryptocurrencies have minor market capitalization.
* Analysis of the adoption rate : The evaluation of the adoption rate of Bitcoin shows a high level of participation by institutional investors and retail dealers, which indicates a strong demand for cryptocurrency.
* Regulatory analysis : Review of regulatory developments related to cryptocurrencies indicate continuous efforts to regulate regulation.
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