Master the art of Fundamental Analysis: Vol 1
#CoinDCXpathbreaker
People have asked me many times for advice surrounding TA, On-Chain Analysis, Technical pattern formation on charts & looks like people perceive TA as the ultimate door to success in the world of Crypto trading, but I honestly feel the majority of the entrants miss the absolute most critical factor of the success of a projects token is Fundamental Analysis.
In my personal opinion, every crypto trader trying to master the art of trading, should learn how to become a Fundamental Analysis expert, and this can actually up their trading game. How? because through Fundamental Analysis alone can a user determine the USPs of what they are looking at as a lucrative investment-
Key factors to look into while studying a project-
- Core Team Members
- In-depth Token economics
- Token numbers- Total Supply, Circulating Supply & Max Supply
- Venture Capitalists involved
- Community strength & Engagement numbers on Social Media
Diving in deeper, I will be writing down the most detailed process on how you should go about researching a project. This will be Volume 1 of Volume 2 guidebook series, and I will try to highlight the best way to tackle the subject and hopefully help you in becoming educated enough on the topic.
Also note, just like my readers, even I am ever-learning & not the ultimate source on how to actually go about your research. My time in the crypto space has helped me in multiple aspects, and with the proper investment of time, even you will be creating your personal guide
Highlights of my Guidebook
In this guidebook, since I want to be detailed about my process and highlight key areas of research to master the art of Fundamental Analysis, I will be covering the following topics in Volume 1:-
- Project name & its native token
- Creation date of report
- Fundamental Analysis introduction
- Scalability & Strength of network
- USPs of the project in research
- Audit report of the project
- Venture Capital (VC) Investor backing
Project Name & its native token
The Coin Ticker is the name of the Token which is listed on the exchange. take the example of Cosmos Network, so Cosmos is the project name, but its native token is named $ATOM. It is absolutely crucial, that while conducting a Fundamental Analysis of any project, this step is not overlooked, there are 1000s of projects in the market and you will land up studying the wrong project.
Creation date of Report
This will help you in keeping a track on updates on the project study. This should be done because most projects will either move to a new contract address, some projects change their roadmap and timeline, few would have testnets deployed before the mainnet and all these factors WILL have an impact on the Fundamentals.
Fundamental Analysis Introduction
This is relatively the easy part of the report, as I will focus on highlighting the features of the project by referring the project whitepaper. You can provide your own personal take by toning down the technical style of writing the whitepapers usually have and make it more simplistic for new people entering the space can comprehend.
Scalability & Strength of network
Main area of focus during the study, supremely important if the project has been listed on a DEX. This area of research should focus on the correct contract address of the project, as this address will be the only way to buy the project tokens, and a wrong contract address is a sure shot disaster, either with lost funds or buying into a scam project. So be double cautious.
Scalability of the network is also a super critical piece-of-information. You should be able to make your readers understand how the particular project interacts with other blockchains and other Layer-1s & Layer-2s.
USP
Focus on all the USPs of the project that will be beneficial to your reader. You should be focused on metrics that would be easy to comprehend and unique to the project. For eg, if a project is brining in a new form of P2E gaming to its ecosystem, you should be mentioning what will be new with this type of gaming that is not seen before within the P2E space.
One big Red Flag 🚩 for any project in my eyes would be the lack of any USPs. The question arises then is why is the project and its token even in the market? To just make money, to just get funding and end up with a rug-pull? Be watchful about this.
Audit Report of the project
A project Audit Report will highlight major risks with the project or if the project is too centralised.
Centralisation High Risks could include:
- Vulnerability of the smart contract
- Exploitation of a loophole by a hacker(s)
- Liquidity threat in event of a hack
During the course of your study of a project, give utmost importance to audit reports, and try to highlight the risks associated with the project with your own interpretation. This will make your report easier to read and understand.
Venture Capitalist backing
After the project audit report, I would put emphasis on this part of the study. The bigger VCs involved in the project will always refrain from exiting on listing and giving the project and themselves a bad name. Hence, a reputed VC & partner backing is crucial to a projects long-run in the future.
This concludes my Part-1 of How to Master the Art of Fundamental Analysis.
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A huge thank you to CoinDCX for giving me this opportunity to write such a detailed report and be a part of the #CoinDCXpathbreaker program, enabling me to share such knowledge with everyone in the crypto space.
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