Fondations of cryptocurrency: essential analysis techniques for cryptographic investors
The world of cryptocurrency has exploded in popularity in the last ten years, with new coins and tokens that launch every few months. However, as the market grows, the need for an informed decision -making process also increases. As a cryptographic investor, it is essential to have a solid understanding of the fundamental analysis techniques for making informed investment decisions.
What are the fundamental analysis techniques?
The fundamental analysis is the process of analysis of the financial, the management team, the sector trends and the competitive landscape of a company to predict its future services. In the context of cryptocurrency, the fundamental analysis provides for the evaluation of the market, currency or token, as well as its technology and development below.
Key concepts for the analysis of the foundations of the cryptocurrency
Before immersing yourself in technical analysis, here are some key concepts to understand:
- Mercato capitalization : the total value of all pending coins or tokens in a particular cryptocurrency.
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- Regulatory environment
: laws and government regulations that regulate transactions and cryptocurrency trading.
- Cryptocurrency mining : the process of validating transactions on the blockchain network and network protection.
Technical analysis techniques for the foundations of cryptocurrency
To support fundamental analysis, you will have to understand the technical indicators that provide information on the price movement models of a coin or token. Here are some essential techniques:
- Middle mobile (but) : a lines graph that traces prices in different periods of time to identify trends and predict future price movements.
- Relative resistance index (RSI)
: a motorcycle indicator that measures the speed and change of price movements, providing an idea whether a coin or token is overloaded or overprint.
- Bollinger bands : a volatility indicator that traces the price above and under two mobile mediums, creating gangs representing a series of prices.
- Support and resistance levels : prices vary in which buyers and sellers are more likely to enter the market, influencing price movements.
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Example: Fundamental analysis bitcoin
For example, let’s analyze the foundations of Bitcoin:
- Market capitalization: about $ 1 trillion
- Supply: 21 million coins
- Blockchain development: decentralized, open source and widely supported by the developers
- Regulatory environment: regulations issued by the government that regulate cryptocurrency transactions in many countries
- Cryptocurrency mining: consent algorithm of the test of work (power)
Using these fundamental analysis techniques, we can identify potential purchase opportunities when the market is hyper -fought or provide for a strong rise to rise when the offer is increasing and the demand is high. On the contrary, we can sell coins or tokens during periods of high volatility or regulatory uncertainty.
Best practices for the fundamental analysis of cryptocurrency
- Stay up to date : monitor market trends regularly, news and regulatory updates to guarantee accuracy.
- Use more indicators : combine technical analysis with the fundamental analysis to obtain a more complete understanding of the performance of the coin.
- Diversify your portfolio : spread investments on various coins or tokens to minimize risk.
- Set the stop losses and profits : limit potential losses by setting clear objectives and using stop loss orders and profits.
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