The cryptocurrency market is only at first glance it seems spontaneous and unpredictable, but nevertheless, any movement can be explained one way or another cause-and-effect relationship. The study of these patterns and the prediction of the behavior trends do crypto-analysts. In their Arsenal there are two powerful application tool, proven by decades of use on the classic stock market — fundamental and technical analysis.
The basic idea of fundamental analysis is that no matter how behaved the coin at the moment, sooner or later the speculative value of the asset closer to its real price. The problem is, how to calculate the true cost of cryptocurrency and to identify among all participants of the market of the future “unicorns” or those whose potential is clearly overrated. And if in traditional investments, fundamental analysis relies on financial statements of companies, the stock market, such information is not provided.
What are the adherents of fundamental analysis when assessing the potential of a particular coin? Primarily on information provided in the White Paper. This document gives an idea about the idea and the project, allows you to assess the professionalism behind it, the team. Important indicators are the features of mining and the size of the issue. Activity team on Github demonstrates what the new feature is implementing the project at the moment, which may also directly affect the value of the asset. Generally, the presence and activity of developers on the Internet is quite an important indicator, and if finding information or with feedback problems have arisen, it is serious occasion to reflect, not whether we are dealing with a dummy or Scam.
Any unique characteristics of the cryptocurrencies that distinguish it from other, reliability of the technology, size of capitalization, the availability of seed investors or the method of distribution is direct indicators that allow analysts to determine the real value of cryptocurrencies. If this figure is above the current market value, the coin can be purchased.
Fundamental analysis — a good tool for long-term investment, but, answering a question about what you should buy, it will not tell you at what point it is most advantageous to do so.
With the task of determining the best point of entry into the market will help to manage technical analysis, the tables and charts, which is full of every crypto currency exchange. Technical analysis focuses on trading volume and price of an asset and predicts the dynamics of prices on the basis of their changes in the past.
The basis of technical analysis is the theory of Charles Dow, one of the founders of Dow Jones and Co, briefly it can be summarised as follows:
History tends to repeat itself: when analyzing the reaction of the traders to an event, it is possible with sufficient share of confidence to predict their future behavior;
The current price of an asset equally affected as the events of the past and present and future projections;
Dynamics of the prices has its explanation, it clearly follows the trends;
No matter what factors influence the formation of prices, is far more important indicators of supply and demand.
Technical analysis really allows you to make relatively accurate predictions in terms of coins has a long history of transactions, but its potential is significantly lower if we are talking about learning a new cryptocurrency. With the current volatility indicators technical analysis is not always able to respond to factors such as changing news agenda or the decisions of regulators, and sensible investment it is advisable to use technical analysis, relying on fundamental data.
Fractals, moving averages, trend line and other ways of measuring technical analysis at first glance seem something impossible to understand. Opening the series of articles “Analyze this,” we will discuss most of them in detail and learn how to apply technical analysis coupled with fundamental, achieving a maximum accuracy of predictions on crypto-assets.