What is crypto fundamental analysis

A Fundamental analysis of cryptocurrenciesIt is an evaluation method that seeks to determine the intrinsic value of a cryptoactive based on qualitative and quantitative factors. Unlike technical analysis, which focuses on price patterns, fundamental analysis investigates the fundamentals of the project: technology, team, token economy, real adoption and market potential.

In the crypto market, fundamental analysis takes different forms from traditional stock analysis, the cryptocurrencies do not generate profits in the conventional sense.

Tokenomics: The Token Economy

The analysis ofTokenomicsand the starting point of crypto fundamentalism. Examine:

  • Total vs current supply:What percentage of tokens are already in circulation? Large quantities not yet released may dilute the value
  • The emission mechanisms:Is the token inflationary or deflationary?
  • Distribution of:What percentage is in the hands of the team, investors and community?
  • The Utility:Does the token have a real function in the protocol or is it just speculative?
  • The Calendar Dress:When will locked tokens be released? Unlocks can put pressure on the price

Essential on-chain metrics

On-chain data provides transparent and verifiable information about the health of a project:

Network Activity

  • Daily active addresses:How many unique wallets carry out transactions daily
  • Transaction volume:The total amount transacted on the network per day
  • Number of Transactions:Gross volume of operations processed

Network value metrics

  • The NVT ratio:Network Value to Transactions — compares market capitalization with the volume traded.
  • The MVRV ratio:Market Value to Realized Value — compares the market value with the average acquisition price of all holders
  • The TVL (DeFi)Total Value Locked in DeFi protocols, indicator of trust and adoption

Team and Technology

Team and technology assessment is essential for early-stage projects:

  • Team Experience:Background of Founders and Core Developers
  • Activity on GitHub:Frequency and quality of commits in the repository
  • Security Audits:Has the code been audited by recognized companies?
  • Technological Innovation:Does the project solve a real problem in a unique way?
  • Investors and Partners:Venture capital funds and corporate partnerships add credibility

Adoption and market potential

Current adoption of a project is one of the strongest indicators of long-term value:

  • The Active Users:Organic user growth indicates product-market fit
  • The protocol recipe:Protocols that generate sustainable revenue are more likely to survive
  • Integration of:Partnerships and integrations with other protocols and companies
  • Addressable Market:The size of the market that the project seeks to serve

Tools for analysis

Use the following tools to perform your analysis:

  • Glassnode and CryptoQuant:Detailed on-chain metrics
  • Terminal of Token:Revenue, TVL and financial metrics of protocols
  • Defi is called:TVL and DeFi ecosystem data
  • by Messari:Crypto project research and reports
  • CoinMarketCap and CoinGecko:Market data and tokenomics

Combine it with technical analysis and risk management to build a more robust and informed investment approach.