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Basic analysis of cryptocurrencies for long -term investments
The world of cryptocurrency has exploded in recent years, and thousands of new coins have appeared every month. However, among chaos, some investors address fundamental analysis as a way to move around the market and make informed investment decisions. In this article, we will examine the basics of investing cryptocurrencies and provide a long -term investment framework in cryptographic space.
What is the basic analysis?
Fundamental analysis includes the assessment of financial health and company or assets results by analyzing its basic indicators, such as earnings, revenues, profitability, debt level and cash flow. By using this method, investors can identify potential weaknesses and growth possibilities and make more conscious investment decisions.
Basics of cryptocurrency basics
Cryptocurrencies are decentralized, digital assets that use cryptography for safe financial transactions. They operate in the peer-to-peer network, enabling users to send and receive funds without the need for intermediaries such as banks. The most famous cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Monero (XMR).
key grounds for considering:
1.
- valuation : Specify the price rate for profit (p/e), which compares the current price of shares.
- Debt levels : Rate the company’s debt index that indicates its level of debt.
- Cash flow and liquidity : Assess the company’s ability to repay debts and maintain liquidity.
- Regulatory environment : Consider the regulatory landscape for the chosen cryptocurrency.
- Market moods
: Analyze market trends and sentiment indicators such as tools for analyzing sentiments.
Case study: Bitcoin (BTC)
Let’s take Bitcoin as an example of the basic framework of analysis. In 2019, we used this framework to assess the basics of Bitcoin before a huge increase in prices:
- Income rate: Bitcoin generated $ 1 billion revenues in 2020, compared to USD 4 million in 2016.
- Profitability margins: Bitcoin profit margin was about 20%, which indicates strong profitability.
- Cash flow: Bitcoin has maintained a positive cash flow, with profits exceeding losses.
Case study: Ethereum (ETH)
Ethereum is another case study for fundamental analysis:
- Income rate: Ethereum generated $ 1 billion revenues in 2020, compared to $ 100 million in 2017.
- Profitability margins: Ethereum profit margin was about 40%, which indicates strong profitability.
- Cash flow: Ethereum has maintained a positive cash flow, with profits exceeding losses.
identification of trends and designs
In addition to fundamental analysis, investors should also look for trends and patterns that can help them make informed investment decisions. Some typical designs include:
- Analysis of trends : Identify long -term price trends, revenue growth rates or other key indicators.
- cycle analysis : Look for repetitive cycles in price movements or revenue growth rate.
- Medium Reverse : Identify potential trends with an average inversion, in which a weak point is expected to recover.
Application
Basic analysis of cryptocurrency offers valuable framework for investors who want to navigate the complex and dynamic world of cryptocurrency markets. By using these frames, investors can identify the potential weaknesses of their selected cryptocurrencies and make more conscious investment decisions. Remember, however, that investing in cryptocurrencies is always associated with significant risk, including market variability and regulatory uncertainty.
