How to evaluate any crypto project using fundamental analysis
Fundamental analysis is the process of finding the intrinsic value of an asset, with the goal to determine whether the asset is overvalued or undervalued. That information can then be leveraged along with technical analysis to decide whether to invest in or trade an asset.
In cryptocurrency fundamental analysis, the approach is somewhat different than that typically used to evaluate legacy market assets. Crypto assets don’t have the historical data required, because there’s usually no history of earnings reports or profit and loss statements.
For cryptocurrency analysis, all the available information on the asset needs to be sought out through research that includes investigating its use cases, its network, the team behind the project, vesting schedules, the list goes on. By looking at the right set of factors, traders can determine the fundamental value of an underlying project before investing.
Here are the 10 steps found to be most useful:
Especially for long-term, buy-and-hold investing, it is critical to read a token’s white paper. This is the document that gives an intentional and detailed overview of a project. A good white paper explains:
Be skeptical because the people behind projects can bend, or even break, the truth.
This happens more often than most realize. For example, Michael Alan Stollery, the CEO and founder of Titanium Blockchain Infrastructure Services, raised $21 million in an initial coin offering (ICO).
He later admitted to falsifying parts of the project’s white paper.
It’s important to ask some hard questions and get complete answers before putting one’s money into a project.
Some questions to consider:
According to some industry sources, nearly 40% of cryptocurrencies that were listed in 2021 no longer
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