16/08/2022
Do long-term crypto investors find success with fundamental analysis?
True, and this is why.
Brad Garlinghouse once said, "If the cryptocurrency market as a whole or a digital asset is solving an issue, it's going to generate some value."
I completely agree with him on this.
Fundamental analysis is a way to determine the value of a financial asset.
Fundamental analysts use this method to analyze the economic aspects of an asset.
It may also include some macroeconomic factors such as;
The economic state, market condition, and the industries using the asset.
Fundamental analysis for crypto assets considers the on-chain metrics.
A growing field of data science that concentrates on open blockchain data.
These valuation metrics may include;
The network hash rates
The top holders
Market capitalization
Trading volume
The number of addresses.
It is possible to enter or exit trades with the data derived from fundamental analysis.
Many investors or traders use this to make their investment decisions.
So understanding an asset from different angles is crucial when investing for the long term.
Ignore the short-term noise in asset prices and focus on its valuation metrics.
If an asset has strong fundamentals, it will grow over time and generate wealth for its investors.
In the crypto market, there are many examples.
Take bitcoin as an example.
Consider the feasibility of using bitcoin as a medium of exchange.
Why is bitcoin unique compared to traditional currency?
One could say that its uniqueness is a result of its 21 million coin fixed supply.
Or we can also mention how it makes international payments easy and faster.
In the end, adoption might increase as a result of these kinds of problems it's solving.
Additionally, its intrinsic worth can increase as Bitcoin adoption rises globally.
Global events like the BTC halving are another element that impacts intrinsic value.
Events widely anticipated and covered in the media can affect coin prices.
But, unexpected events can also have the same effect.
News like the government's decision to ban bitcoin can affect price volatility.
Even though it's somewhat impossible to foresee these events, they still emerge, and you must be ready.
Projects like Axie Infinity, Solana, Polygon Matic, and Avax come to mind as a few examples.
Since their launch, each of these projects has delivered over 1000%.
If you had bought Avax in August 2021 and kept it until now, you would have made a 50% profit.
The rate of wealth creation for investors increases with the project's growth.
Some projects, like Solana, have delivered close to 9000% since their launch.
Now imagine the amount you can generate if you invest in assets with strong fundamentals.
You can also invest in cryptocurrencies based on your fundamental analysis.
All you need to know is whether an asset's intrinsic value is over or underpriced compared to its current market price.
