Crypto fundamental analysis involves taking a deep dive into the available information about a financial asset.
Almost all financial experts agree that crypto is the way of the future. It’s not a matter if cryptocurrencies will be a staple asset in five, 10, or 15 years – it’s simply which coins will lead the way. As you analyze crypto – whether it’s Bitcoin, Ethereum, Litecoin, or some other smaller coins – think of the crypto markets as stock exchanges and consider applying certain methods of analysis..
With cryptocurrency technical analysis, you’re studying statistical trends and looking at historical volume and activity – including price movements and swings – to make educated predictions on where the price is going over the short-term and long-term.
While you’ll have to determine which technical trading tools fit into your trading “toolbelt,” Fibonacci retracement trading is undoubtedly worth a look.
“Fibonacci retracement trading is a popular technical tool used by traders to determine price action,”RJO Futures mentions. “Fibonacci retracement trading is taking two extreme points from a contract’s price, usually a high and a low, then dividing it by a Fibonacci ratio to determine support and resistance levels.”
This method of analyzing fluctuations in value can work well for crypto, but you have to act quickly. With so much volatility, support and resistance levels can experience major ups and downs.
With fundamental analysis, you’re not looking where prices are going, per se. Instead, you’re trying to understand what’s supporting the valuation. In other words, what are the underlying financials? Using this analysis, you can determine whether the data says the crypto is underpriced or overpriced at the moment.