Many pro investors use fundamental tools to analyze and pick their best cryptos and they believe that gossip, stories, facts about a cryptocurrency, its financial situation, and upcoming risk events may move the market. In short, fundamental analysis is the process of using all internal and external factors to establish the intrinsic value of an asset or business.
Some tools used by crypto investors to pick their best crypto are;
White papers
This is like a business proposal that shows us an overview of the cryptocurrency project. Whitepaper carries the potential things that investors need to know about the crypto, such as the technology used, financial details, purpose, a roadmap for upgrades and new features, and so on.
The team
Except for bitcoin, all other cryptos have a specific team behind who guide the company and its blockchain technology. Its members' track records can reveal whether the team has the required skills to bring the project to fruition. The team behind the crypto is
important even if its platform is completely open-source, which means
anyone can access and modify it.
Market capitalization
its obtained by multiplying the circulating supply with the current price. A bigger market cap shows a higher value of all units of a specific cryptocurrency that are for sale right now. market capitalization is used extensively to figure out the growth potential of networks. Some crypto investors view "small-cap" coins to be more likely to grow compared to "large-cap" ones. Others believe large-caps to have stronger network effects, and, therefore, stand a better chance than unestablished small-caps.
Circulating supply
To some, the supply mechanisms of a coin or token are some of the most interesting properties from an investment standpoint. This circulating supply is the number of coins or tokens currently available and in the hands of people. When the circulating supply number is lower may indicate a lack of popularity.
Fewer people have put in the effort to mine the coin, which may impact the long-term forecast of the cryptocurrency and vice versa.
News
The news has the power to make something so incredibly
popular. News provides information about current events, can be through many different media. Whether positive or negative information may have long or short impacts on the price movement of the coin.
Volume
Volume indicates how much crypto got traded in a given time frame. It’s important because it shows how easy to buy or sellthat crypto. The higher the volume, the more easily trader cantrade it off. Typically, charts display the daily trading volume.
Crypto exchange platform
A cryptocurrency exchange is also called a digital currency exchange, It’s a web service that helps people exchange their cash
into cryptocurrencies and vice versa. Examples are Binance, Kraken, Coinbase, eToro, Coinmama, etc, cryptocurrency exchanges are a big part of the whole ecosystem. Choosing cryptos that are listed on many different exchanges is also a good idea before investing.
Closing thoughts
Fundamental analysis can provide invaluable insights into cryptocurrencies in a way that technical analysis cannot. Of course, there are things that Technical analysis can tell us that can’t be predicted with fundamental analysis. That’s why many investors use a combination of both. Hopefully, this article will have helped you understand some of the factors to consider before entering or exiting positions with crypto assets.
