As a crypto trader or investor, you want to know what causes prices to rise, fall or stagnate.
While markets are not always predictable, with sound analysis, you can often get at least a reasonably good idea of what the most likely scenarios might be.
A good trader knows when to do business. They understand industry dynamics and recognise regions where they can foresee what will happen next.
One of the method to decide whether a crypto asset is worth to invest in is fundamental analysis.
Fundamental analysis focuses on the foundations of an asset, or in other words, on any element of an asset that relates to its overall worth.
The concept is simple: if you can recognize that an asset has an inherent value that is out of proportion to its current market price, you can trade on the basis of your analysis and, theoretically, make a profit.
You should aim to identify projects that you believe have a strong chance of success. Then when you invest and the team proves its capabilities, other investors should notice and the price action should be favorable in order to determine their future value.
It’s also working the other way. If you are looking for an asset that has a large market cap, you can determine that the asset is highly overvalued. That’s all right, and it happens often.