Crypto Fundamentals: Beyond the Whitepaper
Welcome to the philosophy of fundamental indicators!
Written by Roel & Alyze Sam
During this blog (and surprise! an upcoming podcast series!) Roel N. and I have joined forces to discuss the fundamental indicators found in altcoins to benefit your trading skills.
On several of our Telegram Channels we catch wind of people becoming overly passionate about different altcoins. “THIS is the next “moon coin”! WHY? Because it has strong fundamentals!!!!” (Here we go again…)
More often than not, their opinion is based on a solid whitepaper. Now, I’m not saying the whitepaper isn’t part of an altcoin’s fundamentals, however one can argue that MOST people:
• aren’t fully capable of understanding all the content found in a decent whitepaper
- THINK they understand both the technical and non technical aspects
- Assume because they read a few whitepapers, they’re now ‘experts’
Sadly, it’s true, one can put together a solid altcoin trading portfolio without ever reading a single whitepaper. Admitting one can not read all the content provided by every ICO (let alone understand all the jargon) will make for a better investor. Finding fundamental indicators to judge all coins by will serve your portfolio well. It’s important to learn and carry your own due diligence based on well thought out decisions. We are going to attempt to help you with that.
Before we dive in deeper on fundamentals, let’s talk about analysis in general. There are two types of analysis. Technical analysis and Fundamental analysis.
Technical analysis (TA) is made up of technical indicators, mathematical formula’s that are used to describe the state of the market price. Coming up with a technical analysis strategy for yourself means reading about technical indicators, picking the ones you think are right for the current market conditions and combine them into something useful. With TA you try to predict entries to confirm your predictions or exit on a whole market. A technical indicator can be used on all coins tradeable on exchanges.
But what about fundamental analysis (FA)…. well it is made of fundamentals right?! (this should be easy then! #maybe) Let’s approach this in a similar fashion as TA, which means discovering the fundamental indicators and pick the ones that will benefit you in the current market.
Investordictionary.com states, “Fundamental analysis is a stock valuation method that uses financial analysis to predict price movement. FA attempts to analyze the company’s operations and the market in which the company is operating to understand the stability and growth potential of a company.”
Maybe by reading this you already start to realize fundamentals are more abstract and one has to figure out for themselves what this means in the context of trading altcoins. Fundamental indicators, just like technical indicators, aren’t applicable to an individual coin but to all coins on tradeable exchanges. With this as a fundamental for our FA we can come up with more concrete definitions for our previously abstract fundamental indicators.
Is this a mouthful and a bunch of nonsense. I don’t think so. Understanding fundamentals will give you a coherent view of the market that will support your technical analysis. This coherence is formed by trading on fundamental indicators, such as:
- past successes of the CEO/CTO/CFO
- present collaborations of the CEO/CTO/CFO
Professional network and connections
Most importantly, financial survivability
- startup incubators
- angel investors competence
Roel and Alyze watched a lot of candles without understanding the connections between these altcoins on a more fundamental level. We were missing an edge. You may be as well. Don’t worry, we want to help. That’s why in the next series we’re exploring this in great depth with examples and reviews. I hope you’ll join us for our upcoming podcast next week. Please give us some feedback, as we are here to help, educate and continue to learn ourselves.