How to Analyze a Cryptocurrency: Fundamental & Technical Style

11月11日

Crypto is fashionable again (was it ever out of fashion?), with Bitcoin BTCUSD pumping to a new all-time high above $82,000. But with all that buzz and excitement, it’s easier than ever to get swept away in the tide of social media hype, viral memes, and “expert” Telegram signals chats.

Is that real success in crypto trading? Not exactly. Real success requires more than just blindly following the noise. The savvy investor knows how to analyze a coin, piecing together a mosaic of factors to make some trading choice. Let’s break down 🤸‍♂️ how to do this effectively.

When looking to analyze a cryptocurrency, there are two distinct approaches you’d want to consider — fundamental and technical analysis. This pair of viewpoints cuts through the noise and gets to the real story behind a coin. Coupling them together can be a powerful recipe for success.

The Basics: Why You Need Both Fundamentals and Technicals

Crypto analysis is all about the combination of fundamental and technical approaches.

• Fundamental Analysis (FA) helps you determine whether a cryptocurrency holds long-term potential based on its real-world application, team, and project structure.
  

• Technical Analysis (TA) lets you gauge market sentiment and potential price moves by analyzing past price actions and trends.
  

Master both, and you’ve got yourself a complete toolkit. FA tells you if a coin is worth your time, and TA lets you fine-tune your entries and exits.

Fundamental Analysis: Reading Between the Blockchains

Fundamentals give you the long-term view—what a project stands for, what problems it’s solving, and whether it has staying power. A coin with solid fundamentals usually has a strong foundation, dedicated team, and clear purpose. Here are a few key aspects to evaluate:

Use Case: Does This Coin Do Anything Useful?

Not all coins are created equal, and some are, well… kind of a pointless joke, or created to be a pointless joke but turned out to be a big deal (did anyone say Doge DOGEUSD?) If you want a real-world use case, look at Ethereum ETHUSD — it opened up the entire decentralized finance (DeFi) and smart contract universe. Now compare that to yet another dog-themed token.

The key is to ask yourself: does this coin solve a real-world problem, or is it banking on social media likes? A strong use case equals a stronger shot at lasting value.

Team and Leadership: Who’s Running the Show?

The team behind a coin is often the make-or-break factor. You want to see solid, experienced people who’ve been in the space and know their stuff. Look for LinkedIn profiles, past projects, and what industry insiders are saying.

Pro tip: if you can’t find the team anywhere online, or if their CEO goes by something like “CryptoKing” on Reddit or Telegram, proceed with caution (or dump it).

Investors and Backers: Who’s Got Skin in the Game?

In crypto, a solid roster of backers can be like a seal of approval — big-shot VCs, famous angel investors, or major blockchain funds often bring more than just cash. Big names like Andreessen Horowitz (a16z) or Pantera Capital backing a coin? That’s a good sign as they likely see something worth the investment.

But let’s keep it real: even the pros get it wrong. Sequoia’s high-stakes investment in FTX? That didn’t age well. It went from a headline win to a headline regret. The lesson? Big names can be a great vote of confidence, but they’re no substitute for doing your own homework.

Dig into how engaged these investors are. Are they making decisions or are they just a logo on the website? If they’re actually involved, it adds weight. Just remember: your best edge comes from putting in the research, not just riding on who’s along for the ride.

Partnerships and Network: Are They Walking the Talk?

A strong project is often backed by legitimate partnerships. Real collaborations with reputable companies from the industry show a coin has a foothold in the market, a strong network. But watch out for overblown claims—a name drop isn’t the same as a partnership. The best projects are the ones where you can verify the collaborations and see real interaction.

Technical Analysis: Getting the Pulse of the Market

If FA tells you what a coin is, TA tells you how it’s behaving in the market. TA is all about catching trends, spotting patterns, and getting the timing right. Here’s where to start:

Indicators to Watch: Moving Averages, RSI, and MACD

• Moving Averages (MA): These smooth out price action to show you the market’s general direction. A 50-day MA crossing above a 200-day MA? That’s usually a bullish sign.
  

• Relative Strength Index (RSI): The RSI tells you if a coin is overbought (above 70) or oversold (below 30), signaling potential reversals.
  

• MACD (Moving Average Convergence Divergence): When the MACD line crosses above the signal line, it’s a buy signal; below, it’s a sell signal. This helps you ride momentum without getting whipsawed.
  

Chart Patterns: Know Your Shapes

Patterns like head and shoulders, double tops/bottoms, and trend lines are your map to market sentiment. Look for breakouts past resistance levels or breakdowns below support as entry and exit points. But stay flexible — that’s crypto and things can change on a dime.

Meme Coins and the Hype Machine: Beware the FOMO

If you’ve been in the crypto game for any time at all, you’ve seen the lure of meme coins. From Dogecoin to Shiba Inu, these coins have made some people rich — but they’ve also created some bagholders.

• Don’t Chase Trends: Just because a coin is all over TikTok doesn’t mean it’s a wise investment. Meme coins often rely on community-driven hype rather than any real-world utility. FOMO is the quickest way to make a costly mistake.
  

• Be Wary of Telegram and Discord “Tips”: While some groups are genuinely insightful, many operate more like echo chambers. If your trading strategy is “I saw it in a chat,” it might be time to rethink your approach. Look for projects with substance, not just the latest meme.
  

Bringing It All Together: Using FA and TA for Smarter Trades

Blending FA and TA lets you go beyond hype. Here’s a solid plan to put these tools to work:

• Research the Fundamentals: Assess if a project has real value based on its use case, team, and partnerships.
  

• Look for Technical Confirmation: Use technical analysis to decide the best time to enter and exit.
  

• Set Goals and Limits: Establish your profit targets and stop-loss points before you buy.
  

Crypto trading is part science, part art. Fundamental analysis gives you the big picture, while technicals keep you tuned in to market conditions. Use them together, and you’ll be a lot less likely to end up with a token that’s only valuable for a while.

Final Take: Follow the Data, Not the Crowd

Crypto success isn’t about catching the latest Twitter trend — it’s about staying grounded in facts and making decisions based on data, research, and analysis. Use FA to pick projects that last and TA to catch price action at the right time.

So, Which Type of Analysis Do You Prefer?

Are you more of a fundamentals fan, focusing on the project’s long-term vision and team? Or do you live by the charts, riding trends and tracking indicators? Maybe you’re a mix of both? Whichever camp you fall into, we’d love to hear your thoughts.

Drop a comment and share your go-to analysis strategy—let’s get the conversation started!