[Market Analysis] How to evaluate any crypto project using fundamental analysis

February 17, 2023

The standard blockchain investor often finds themself at a crossroad: They believe in blockchain's ability to change the world, but they cannot appropriately weed out the pretenders.

Finding intrinsic value is difficult enough in traditional markets; in crypto, there are even more pitfalls. For example, crypto assets don't have the historical data required, because there's usually no history of earnings reports or profit and loss statements.

The question, then, is how does one conduct fundamental analysis properly in the crypto space? Here are the 10 steps found to be most useful:

1) Read the white paper

Especially for long-term, buy-and-hold investing, it is critical to read a token's white paper. This is the document that gives an intentional and detailed overview of a project.

A good white paper explains the project's goals, the use case and distribution, the team's vision, the technology behind the token, plans for upgrades and features, how the token provides value to users and other essential considerations.

2) Assess the claims in the white paper

Be skeptical because the people behind projects can bend, or even break, the truth.

It's important to scrutinize claims in the paper and to demand proof that the team can achieve its goals. Additionally, an examination of the core problem-solution issue is important here: Is the project inventing a solution to a non-existent problem?

3) Look at competitors

According to some industry sources, nearly 40% of cryptocurrencies that were listed in 2021 no longer exist.

That serves as an important truth investors need to take into account; a lot of projects — close to half and it could be even more — fail, and fail miserably.

Graph of deactivated cryptocurrencies on CoinGecko, by year listed.
Source: CoinGecko

Scrutinizing a project's white paper reveals the use case the crypto asset is targeting and the problem it's trying to solve. One should then consider whether or not that use case is, in fact, viable and wanted.

To read the complete story and see the rest of the steps, head over to Cointelegraph.

Regards,

Russell DeCorte
Director
Markets Pro