Cryptocurrency analysis

Today, the world is on the verge of a digital revolution that will affect all areas of public life. Cryptocurrencies are one of the most relevant topics when it comes to the digitization of the economy. In this article, we will cover such a topic as cryptocurrency analysis and what can be expected in 2020.

Three main types of cryptocurrencies

When the question is about cryptocurrencies, the first thing that comes to mind is Bitcoin. Bitcoin was the first blockchain. For a long time, Bitcoin remained unique, and only after a few years, forks and hard forks began to appear, based on the Bitcoin original code, but with some changes. This marked the beginning of new alternative cryptocurrencies, which in a generalized sense were called Altcoins. However, it is important to understand that there are such types of cryptocurrencies that are very different from Bitcoin and they have completely different goals and complete their tasks. Decentralized application tokens are the third main type of the cryptocurrencies. Compared to the other two types of crypto coins, tokens are unique in terms of not having their own blockchain and they are dependent on the network of another cryptocurrency.

While trading cryptocurrencies, it is best to pay attention to significant events in terms of the analyzed cryptocurrency and watch how the crypto coin reacted to similar events in the past. When you think about how to analyze cryptocurrencies you have to open the charts and use technical, fundamental and computer analysis. However, the meaning of technical and computer analysis in the cryptocurrency sector is significantly lower than in other markets. The fundamental crypto analysis is the only option that allows you estimating of quote outlooks as well as analyzing the cryptocurrency market situation as a whole. 

Cryptocurrency quotes are affected by:

• information about exchanges. An analysis of the cryptocurrency market should begin with an assessment of how reliable the project and wallet are. 
• news about updates. We are talking about forks, changing the consensus protocol, alpha and beta testing, updating, introducing new features. Usually it is welcomed if it meets the expectations of investors.
• new members joining to the network. It is usually appreciated by investors, as this indicates the interest of other participants towards the economic system of the project. 
• legislative changes or restrictions. News about licensing of exchanges in Japan, limitation of exchanges in China and South Korea, an obligation to provide data on investors’ wallets can radically change the market by at least 10% in one or another direction.

Making a fundamental analysis of Bitcoin, it is worth mentioning that there are no fundamental drivers that somehow shift its price.

In terms of Altcoins everything is more complicated and in order to make better investment decisions it is important to be engaged into the research to assess the viability and potential of the coins. 

Check also Which crypto projects to pay attention in 2020

Cryptocurrency analysis approach

Let us consider several factors that may be useful in the fundamental analysis of digital coins:

Demand

Increase or decrease in demand allows us to evaluate the interest of traders and investors in the cryptocurrency. Digital coins, which in the future may be useful to the community, will no doubt be in demand.

Current market situation

When analyzing the prospects of cryptocurrency, it is necessary to assess its position in the market and compare with direct competitors. The large cryptocurrency projects have already received some community support and attracted a large amount of investment. The more people work with a coin, the higher demand for it.

White paper

WP is part of the platform`s content strategy and a powerful B2B marketing tool. Its goal is to provide a detailed proposal outlining the purpose and mechanics of the cryptocurrency. You should always read the digital coin white paper before making investment decisions.

Team

Information on the development team has a strong impact on cryptocurrency and allows you to evaluate the prospects of the project. When the development team consists of well-known, reputable experts, it is likely that the price of the coin will rise. If they hide their real names the rate of cryptocurrency will most likely fall.

Digital coin social channel

This provides the official and main communication channel of the core development team. Join the channel and see the development team’s interaction with the community. Ask questions to get more information about the coin.

Community Forums

Forums are a great way to better understand the coins, as well as the sensations surrounding the coin. The variety of thoughts allows you to grasp the mechanics of the coin far better, especially if you are not technically inclined. 

The above list of factors for the analysis of coins is incomplete. There are no strict rules in fundamental analysis that limit the number of tools and sources of information used.

Fundamental analysis allows traders and investors to find interesting and promising cryptocurrencies that are currently underestimated for some reason, but may be in demand in the future.

Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.