How To Use Fundamental Analysis In Cryptocurrency Investment

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How to use basic analysis in investments in cryptocurrency

As the popularity of the cryptocurrency continues to grow, many investors are looking for ways to make informed decisions about investing in these digital assets. One of the effective approaches to basic analysis is the use of qualitative and quantitative methods to identify underestimated or incorrect cryptocurrencies.

What is basic analysis?

Basic analysis includes the study of basic economics, technology and market trends cryptocurrencies in order to understand its potential value and make informed investment decisions. Unlike technical analysis, which focuses on short -term price movements, basic analysis focuses on long -term prospects of cryptocurrencies.

Key concepts of basic analysis in the cryptocurrency

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• Trends in industry : Analyze trends in industry, including receiving new technologies, changes in consumer behavior and market dynamics.

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Market Sentiment

: Monitor market sentiment through surveys, social media and online forums to understand the attitudes of investors to cryptocurrencies.

• Regulatory environment : Assessment of regulatory environments and updates on cryptomen, such as government policies, laws and regulations.

• Competition : Compare the value design of the cryptomena with its competitors on the market.

Use of basic analysis to identify undervalued or incorrect cryptocurrency

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• Price to profit rate : Compare the current price of cryptocurrencies with the historical price and profit ratio (PE) to determine whether it is undervalued or overvalued.

• Dividend proceeds

  : Analyze the dividend yield cryptocurrency to assess its potential for long -term growth.

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• Risk of concentration : assess the risk of concentration by comparing market capitalization and PE ratio of various cryptocurrencies.

Case study: Bitcoin vs. Ethereum

For example, we take two popular cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH) as an example:

* Market capitalization : BTC has a market capitalization of approximately $ 500 billion, while ETH has a market capitalization of approximately $ 200 billion.

* Price to profit rate : BTC trades approximately 80 compared to 20 ETH 20.

* Dividend yield : BTC pays a dividend yield of approximately 0.5%, while ETH does not pay any dividends.

With these tools and concepts of basic analysis, the investor can conclude that Ethereum is undervalued due to lower market capitalization, PE ratio and dividend yield compared to bitcoins. On the contrary, a higher market for market capitalization and price ratio and gainful production could make it a more attractive investment option for investors looking for long -term growth.

Proven procedures for applying basic analysis in the cryptocurrency

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• Stay up -to -date : Stay informed about market trends, regulatory updates and economic indicators to perform a more accurate basic analysis.

• Avoid emotional decision -making : Avoid emotional decisions based on short -term prices or speculation movements.

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