🔍 How I Perform Fundamental Analysis in Crypto (A Thread) 📊
🚨 Don't Skip This! My Years of Experience Can Save You Big Losses! 🚨
Fundamental analysis is key to understanding an asset's intrinsic value – a measure of its true worth. Here's how I approach it, sharing my insights from years in the game. Let's dive in! ⬇️
💡 The Foundation of Conviction 💡
Fundamental analysis is your ticket to long-term asset conviction. It helps you stay confident in the midst of crypto volatility, and these steps will guide you to better decision-making.
1️⃣ Project Analysis
2️⃣ Financial Analysis
3️⃣ On-Chain Analysis
Let's break it down.
1️⃣ Project Analysis 📜
Start here. The white paper is your Bible. Seriously, read it once, twice, and again. I'm surprised how many invest without this step. The white paper should cover:
✅ Problem & Solution
✅ Tech Explanation
✅ Token Use Case
✅ Tokenomics
✅ Team Background
A solid white paper will push you deeper into analysis.
🔍 Team Scrutiny
Don't overlook this. Research team members, check academic references, LinkedIn, and even their Google Scholar citations. Are they here for the long haul or a quick exit?
🗺️ Roadmap Review
Carefully assess the roadmap. Does it align with your investment horizon? A transparent roadmap is essential – see how the aavegotchi team does it: [link]
🏆 Competitor Check
Who's the sector's first mover? Compare market caps and advantages. Are users attracted? Understand user preferences for this project.
👥 Community Dive
Engage with the community on Discord and Telegram. Are they engaged deeply? Passionate? Memes can indicate a strong community and project narrative.
2️⃣ Financial Analysis 💰
Now, let's delve into financial metrics. Start with market cap and fully diluted value, foundational for valuation. Sadly, some skip this crucial step.
💧 Liquidity Check
Factor in liquidity. Illiquid assets can be risky. See how much slippage occurs when trading, as price shifts when large holders cash out.
📈 Tokenomics Deep Dive
Understand tokenomics – it drives supply and demand dynamics. The utility of the token, real-world use cases, distribution, emission rates matter.
🤝 Team Vesting & Emission
Vesting schedules, distribution, and emission rates are vital. Uninformed supply-side selling can lead to short-term losses. Know the annual inflation rate.
💸 Token Terminal Insights
Use Token Terminal to assess revenue, P/E, and P/S ratios. Low P/S and growth potential suggest a strong investment.
📊 Discounted-Cash Flow Model
Consider a discounted-cash flow model. It's not perfect, but it helps assess long-term value based on expected growth and discount rate.
3️⃣ On-Chain Analysis 🔗
Finally, assess on-chain activity using platforms like Glassnode, Nansen, and DuneAnalytics. Look at addresses, holder dynamics, supply on exchanges, and more.
🧐 Beware Red Flags
Watch for shifts in addresses or supply on exchanges. Red flags can indicate imminent sell-offs.
📑 Document & Reference
Keep your analysis documented. Excel sheets, docs – whatever works for you. Reassure yourself when markets dip.
🔒 Final Note
This process works for me, but I'm not an expert. Pour hours into research, decide to invest or not, and be content knowing you've done your due diligence.
Share this thread if you found it helpful! Remember, you can always reach out for project research assistance.
📞 DM me for Project Research +2348115355053