Fundamental analysis in cryptocurrencies is an approach that aims to assess the intrinsic value of a digital asset, taking into account factors such as the technology behind the coin, the development team, the target market, the competition, and the utility of the token. One of the parameters of fundamental analysis in crypto is TVL, loosely translated as "total value locked".
TVL is a metric used especially in decentralized finance (DeFi) that represents the total value of assets that are locked in a specific protocol. Here are some considerations about TVL:
1. Protocol Health Indicator: A high TVL usually indicates that the protocol is popular and reliable, as more users are willing to trust it with their assets.
2. Project Comparison: TVL can be used to compare different DeFi protocols. Projects with increasing TVL can be seen as more attractive.
3. Volatility: TVL can fluctuate with market conditions, reflecting both investor confidence and changes in asset prices.
4. Long-term Stability: A stable and growing TVL over time can be a sign that a project is consolidating itself in the market.
Combining technical analysis with TVL tracking can provide a more comprehensive view of a crypto asset’s potential. This approach helps investors make more informed decisions, considering both the project’s fundamentals and its market acceptance.