cryptocurrency: fundamental analysis for crypt – key indicators to look at
The world of cryptocurrency has undergone a remarkable increase in popularity in the last ten years, with many investors and traders who crowd in this new and not tested market. As with any emerging investment opportunity, it is essential to conduct in -depth research and apply a fundamental analysis when evaluating the cryptocurrency potential.
What is cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses encryption for security and is decentralized, which means that it is not controlled by any government or financial institution. The best known example of cryptocurrency is Bitcoin (BTC), which was created in 2009 as open source software project.
Key characteristics of cryptocurrencies
Before immersing yourself in the fundamental analysis, we examine the key characteristics of the cryptocurrencies:
- Limited supply : most cryptocurrencies have a limited supply of coins or tokens, ensuring that their value cannot inflate artificially.
- Decentralized : the cryptocurrencies operate on a decentralized network, in which no individual entities check the flow of funds.
- Blockchain technology
: Each transaction is recorded on a public master book called Blockchain, which allows transparent and safe transactions.
- Digital property
: The ownership of the cryptocurrency is digital, allowing investors to archive their activities safely online.
Fundamental analysis: Key indicators to look at
When evaluating the potential for cryptocurrencies, the fundamental analysis becomes crucial to understand the proposal for the value below. Here are some key indicators to watch:
- Price movement : analyze the price movement of a cryptocurrency over time to identify trends and models.
- Technical indicators : use technical indicators such as mobile media, RSI (relative resistance index) and Bollinger bands to evaluate the feeling of the market and potential purchase/sale signals.
- Fundamental analysis : examine factors such as revenues growth, the users’ base, adoption rate and the competitive panorama to evaluate the sustainability of a cryptocurrency.
- Regulatory environment : remain informed on regulatory developments in target markets, since changes in laws or regulations can have a significant impact on the value of cryptocurrencies.
- Security : Make sure the technology below is safe and resistant to hacking attacks.
Bitcoin Analysis (BTC): A case of study
To illustrate the importance of the fundamental analysis, we examine Bitcoin (BTC), one of the most exchanged cryptocurrencies:
* Price movement : BTC has constantly exchanged in a restricted range in the last ten years, with significant prices of prices in 2017.
* Technical indicators : medium mobile and Bollinger bands suggest that Bitcoin is likely to continue its upward tendency, led by an increase in adoption and institutional investments.
* Fundamental analysis : The growth of Bitcoin revenues from 2009 to 2020 was $ 14.3 billion, while the users’ base extended from about 100 users to over 70 million active addresses.
* Regulatory environment : Despite regulatory challenges, Bitcoin remains a popular choice thanks to its decentralized and safe nature.
* Security : The decentralized architecture of the Bitcoin network guarantees that transactions are tampered with.
Other key actors in the cryptocurrency market
While Bitcoin was the most important cryptocurrency, other remarkable players include:
- Ethereum (ETH) : a popular blockchain platform with a strong ecosystem for developers and a growing adoption.
- Litecoin (LTC) : a faster and lighter alternative to Bitcoin, with a dedicated user base.
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