How to perform a basic analysis of crypto investment
The world of cryptocurrencies have been on wild driving in recent years, while prices are wildly fluctuating and investors are looking for returns that often do not surpass traditional investments. As a result, investing in cryptomena can be exciting and intimidating. Although the potential of high returns is undeniable, it is necessary to separate the hype from the ground up when making cryptomen investments.
What are the basic factors?
Before you dive, how to perform a basic analysis, we define what the basic factors mean in the context of the cryptomen. Basic factors apply to the basic characteristics of cryptocurrencies that may affect its value and performance. These factors include:
1.
- Technical analysis : Technical indicators such as graphs, formulas and trends that provide a view of the movement of coins.
- Regulatory environment : government policies, laws and regulations affecting the cryptocurrency market.
- Market Sentiment : Total attitude of investors, including bull or bear sentiment.
Performing a basic analysis for crypto investment
To perform a basic analysis for crypto investment, follow the following steps:
- Examine white papers, travel map and coin team to get a sense of your basic technology and use.
- Evaluate the offer and demand : Analyze the dynamics of the offer and demand in the chosen cryptocurrency. Look at price charts and compare them to historical data to identify formulas and trends.
- Analyze the technical indicators
: Use technical indicators such as sliding diameters, the relative force index (RSI) and Bollinger bands to measure dynamics and sentiment of coins.
- Assess the regulatory environment : Research government policies and laws on cryptocurrencies on your chosen market. Consider factors such as taxation, license requirements and regulations against money laundering.
- Evaluate market sentiment : Look at the market trends and sentiment indicators such as social media, forum and online community interviews, to find out the enthusiasm of investors for cryptocurrencies.
Case study:
Let us examine the basic analysis of bitcoin (BTC) using the above steps.
* offer and demand: The BTC total offer is limited to 21 million, while the total market capitalization is more than $ 2 trillion. This creates a strong imbalance of demand.
* Technical analysis: BTC Price Chart shows the consistent upward rise with strong bull crossing between its short and long -term sliding diameters. RSI is 70, indicating the conditions.
* Regulatory environment: Bitcoin operates on the unregulated market, making it attractive to governments that want to accept cryptocurrencies for their own purposes. The European Union’s regulatory framework also caused interest in BTC as a potential warehouse.
* Market sentiment: Twitter conversations and online forums are full of bull sentiment towards bitcoin, powered by a recent price increase.
Conclusion
Performing a basic analysis for crypto investment requires attention with detail and understanding of the basic factors that support cryptocurrencies. By evaluating the dynamics of supply and demand, by analyzing technical indicators, evaluating regulatory environments and exploring the market sentiment, investors can get a deeper understanding of their chosen cryptocurrency and make informed investment decisions.
