What is Fundamental Analysis (FA) in Crypto Trading?

    Nov 04, 2022

    Many participants in the cryptocurrency market are likely familiar with the two most commonly used schools of analysis, technical analysis and fundamental analysis. In this article, with discover what is fundamental analysis and how to apply fundamental analysis to evaluate any project.

    What is fundamental analysis?


    First, we will find out about what is fundamental analysis in crypto trading. Fundamental analysis is a method of analyzing the most basic elements of a project. Investors will analyze the internal and external factors of the project, and at the same time evaluate the impact of these factors on the value of the project.

    The core purpose of fundamental analysis evaluates whether the current value will be higher or lower than the current market price, thereby making sound investment decisions to maximize returns.

    Technical analysis and fundamental analysis

    In the Crypto market, there are two schools of analysis chosen by many investors: fundamental analysis and technical analysis.


    • Technical analysis is the practice of investors studying price charts and making predictions about future price trends, thereby making investment decisions.
    • What is fundamental analysis: This is the method of analyzing the remaining factors (except price) that affect the price of a coin such as technology, development team, community, product, reputation level of the project… Thereby assessing the potential of the coin and the project to make investment decisions.

    These are two widely used methods, but none of them is absolutely accurate. Each school of law has certain advantages and disadvantages. Therefore, investors can depend on their strategy and profit goals to choose the appropriate analysis method.

    What are the advantages and disadvantages of fundamental analysis?

    Fundamental analysis is the school of analysis chosen by many investors. To understand what is fundamental analysis method clearly, let's explore the advantages and disadvantages of fundamental analysis.


    Fundamental analysis helps investors make judgments about the most important factors of a project, the influence of these factors on the price movement of a coin. In addition, fundamental analysis helps traders to make better decisions in the long term.


    Like technical analysis, fundamental analysis requires users to have a very large amount of market knowledge, including macroeconomics, financial markets, and technology. This is not a method suitable for investors who are new to the market.

    In addition, the technical analysis method is suitable for long-term investors, so this method does not promote too much effect in short-term transactions.

    How to analyze a crypto project by fundamental analysis?


    After understanding an overview of what is fundamental analysis, and its pros and cons, Market247 will guide you through how to analyze any crypto project.

    To analyze a potential Crypto project, you can implement the following

    • Identify external factors, position the project in the general crypto market
    • In-depth analysis of the project

    Positioning the project in the market

    You need to answer two questions

    • Is the project the piece that the market needs?
    • What is the future growth potential of the project?

    To determine if a project is a piece that the market needs to supplement, you need to consider two factors: What industry the project is in and which ecosystem it is in.

    At the present time, the crypto market is divided into many different Blockchain ecosystems with their own decentralized economies, each economy will have many industries and in each industry will have its own competition.

    After identifying the above two factors, you will evaluate whether the project fits the overall picture. Specifically:

    • A project with good development potential but belonging to an underdeveloped ecosystem that does not attract cash flow is very difficult to achieve long-term success.
    • On the contrary, even if it is just an ordinary project, if it is located in a growing ecosystem, attracting cash flow and market interest, it will have great development prospects in the future.

    Once you have assessed the project's position in the market overview, you will determine the project's growth potential.

    In-depth analysis of the project

    When doing an in-depth analysis of any crypto project, you need to pay attention to the following 4 factors:



    For investors who apply fundamental analysis, the study of the project's Tokenomics is extremely important because this is considered the soul of a project when it is released to the community.

    Current development situation

    About the product: What is the main product of the project? What problems does this project solve today? Are these solutions appropriate? About the development of the project: Evaluation through On-chain data such as TVL, Volume, number of partners, revenue and profit generated...

    Competitors in the same segment

    Comparing the project with competitors helps investors have a more objective view of the project's product, can it beat other competitors, and what is the development status of the rival project? any…

    In addition, when in-depth analysis of a project, you need to consider information such as Roadmap, reputable development team, backer, active project community, etc.

    What are fundamental analysis tools?

    The official channel of the crypto projects

    Each project has many different news channels to update the fastest and most accurate information to its community. You can join the community of projects through channels such as Telegram, Twitter, Discord, Medium, Website, ... to understand more about the project you are intending to invest in.

    Also, potential projects often have a lot of fake channels, so be sure to follow the project's official channels.

    Data aggregation website


    Currently, there are many reputable websites built to update specific data for more accurate and objective analysis.

    You can follow the most prestigious crypto market websites today such as Coingecko, CoinMarketCap, DuneAnalytics, Token Terminal, Defillama, Glassnode,...

    In-depth research and analysis channel

    You can refer to youtube channels for in-depth reviews of projects such as Finematics, Economics Design, The Daily Gwei, etc.


    Above are the sharing of fundamental analysis that has compiled. Hopefully through this article, you have a better understanding of what is fundamental analysis and how to use fundamental analysis to evaluate Crypto Projects. If you have any questions about what is fundamental analysis method, don't forget to comment below for a quick response.

    FAQs - What is fundamental analysis method?

    Is fundamental analysis useful in crypto?

    Fundamental analysis will give you a better picture of what is happening in the cryptocurrency market. With it, you will get information that helps you distinguish valuable tokens from those with low potential. However, using it as a stand-alone method of analysis is not the best.

    Technical analysis and fundamental analysis - which is better?

    Depending on the purpose and strategy of the investor to choose the right method. Fundamental analysis is most commonly used when determining the quality of long-term investments, while technical analysis is used more in reviewing short-term investment decisions.

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