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🔥Continuing with the concept of Fundamental Analysis (FA)..🔥
The primary goal of fundamental analysis is to ascertain the inherent value of a cryptocurrency.
By comparing this intrinsic value with the current market price, you can determine if a crypto asset is undervalued or overvalued. An undervalued asset may present a buying opportunity, while an overvalued one may suggest it's time to sell and take profits.
Take Dogecoin, for example. Does it possess any intrinsic value? Mark Cuban, the technology entrepreneur, doubts it, stating, "That’s not to say [dogecoin] has any intrinsic value. It doesn’t right.”
Nevertheless, employing fundamental analysis tools provides more insight. So, what exactly is Dogecoin? It lacks several fundamental value propositions such as a roadmap, developer team, and even a whitepaper.
However, it boasts a substantial market cap, high 24-hour volume, and widespread recognition among cryptocurrencies. It has even demonstrated utility when Mark Cuban’s NBA team, the Dallas Mavericks, accepted it as payment for tickets. Clearly, it holds intrinsic value.
While fundamental analysis may suggest that Dogecoin would be overvalued at $1, it could be an attractive buy at 5 cents.
Key factors to consider for fundamental analysis:
- Market cap
- Volume
- Tokenomics
- Total value locked
- Roadmap
- Team members
- Community size and engagement
- Rate of network growth
- Rate of adoption
- Whitepaper
- Use case
By evaluating these and other factors, investors can utilize fundamental analysis to make informed decisions about whether to buy, sell, or hold a particular asset. It's a valuable tool for both short and long-term investors, aiding in identifying companies with strong financial fundamentals that may be poised for growth.
Stay tuned for part 2, coming soon! Like and share for updates!
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