Fundamental Analysis | What are the best tools for analyzing high-quality crypto assets?

TL; DR

Fundamental analysis provides traders and investors with essential information to help them make informed investment decisions.

The market value to realized value ratio (MVRV), network value to transaction ratio (NVT), and stock flow ratio are currently key fundamental indicators for crypto assets.

Currently available high-quality encryption currency analysis tools for traders include BaseRank, Crypto Fees, Glassnode Studio, Coinigy, TradingView, Cryptowatch, CoinMarketCal, Coin Metrics, and CryptoView.ch.

Traders need to use top-notch encryption analysis tools and indicators because cryptocurrencies often come with price fluctuations, and using various tools can help people understand the market behavior of cryptocurrencies affected by this.

Introduction

Traders who invest in crypto assets and other digital assets need to learn to analyze the specific performance of these securities in the market. Most crypto projects provide sufficient information to users through whitepapers, communities, and websites, enabling investors to make informed investment decisions. Investors typically use quantitative and qualitative methods to evaluate the development potential of cryptocurrencies. This article will explain how investors use fundamental analysis to assess the value of cryptocurrencies.

What is Fundamental Analysis?

Fundamental Analysis is a process of evaluating the intrinsic value of crypto assets to determine whether they are overvalued or undervalued. In other words, fundamental analysis is a method used to determine the true value of an asset, which typically involves analyzing internal and external factors that affect the asset’s price.

Crypto assessors use crypto asset analysis tools to determine the true value of these digital assets. Currently popular crypto technical analysis tools include the market value to realized value (MVRV) ratio, the network value to transactions ratio (NVT), and the stock-to-flow ratio. These on-chain metrics can be used to measure the true sentiment of the crypto market.

Key Fundamental Analysis (FA) Indicators

As mentioned earlier, Crypto Assets fundamental analysts will use encryption analysis tools to analyze these digital assets. These indicators enable us to understand the market trends of Crypto Assets before purchasing. The following will elaborate on Market Value to Realized Value (MVRV), Network Value to Transactions (NVT), and Stock-to-Flow Ratio.

Market Value to Realized Value Ratio (MVRV)

The ratio of market value to realized value refers to the ratio of the market value of crypto assets to their realized value. It is usually calculated by multiplying the total circulating supply of an asset by its current market price to calculate its market value.

On the other hand, the realized value is calculated by multiplying each coin by the price at the last time it moved. In addition, appropriate data such as Bitcoin’s UTXO technology can be used to calculate the realized value. This realized value, also known as realized capitalization, is a better way to measure the value of crypto assets because it uses the true price of each coin when it moves.

MVRV = Market Value/Realized Value

If MVRV is above 1, it indicates that the value of crypto assets is overvalued.

Generally speaking, if the MVRV value is high, it indicates that the current market price is higher than the value of the crypto asset when investors bought it, suggesting that investors may sell the tokens or coins in the near future to make a profit. Conversely, if the MVRV value is low, it indicates that investors may hold the coin and wait for its value to rise.

The ratio of Network Value to Transactions (NVT) on the chain

Of course, the Network Value to Transaction Ratio (NVT) is also one of the practical indicators for crypto trading. This on-chain analysis tool is similar to the Price-to-Earnings ratio (P/E) used in traditional finance for handling stocks.

We typically obtain the NVT ratio by dividing the market value of an asset by the daily trading volume that reflects the inherent value of crypto assets. This indicator has various implications for traders and other investors.

For example, if the price of crypto assets continues to rise without trading volume support, the currency may enter a bubble zone. Broadly speaking, if the NTV ratio is 90-95 or above, a price bubble may occur. This is because the currency’s price is rising while its underlying value remains unchanged.

If the price remains stable, but the trading volume is increasing, it indicates a buy signal. A low NVT ratio indicates that the asset is undervalued, showing a bearish momentum. On the other hand, if the NVT ratio remains constant, it indicates a relatively balanced relationship between asset growth changes and its transfer volume.

Inventory Turnover Ratio

The Inventory-to-Flow Ratio is another top encryption analysis tool that can help traders understand how to interpret the prices of encrypted assets. However, this is an indicator for encrypted currencies with limited supply, such as Bitcoin. It treats this encrypted currency as a fixed scarce resource, similar to precious minerals such as gold and diamonds.

The inventory turnover ratio shows the change in the new supply of an asset during a specific period (such as one year) and indicates the length of time required to produce the current cycle supply.

Bitcoin is a typical example of a fixed supply, with a fixed supply of 21 million. We can calculate the inventory turnover ratio by dividing the circulating supply by the total production within a year. For Bitcoin, we can calculate its annual production by the quantity of newly mined bitcoins. We can use the following formula to calculate the inventory turnover ratio of Bitcoin.

Assuming an estimated circulating supply of 19,000, the annual emission is approximately 328,500.

So, Bitcoin’s S2F value = 19,000,000/328,500 = 57.84

A high price indicates that this commodity is very scarce. For example, the S2F value of Bitcoin indicates that it would take 57.84 years to produce 19 million Bitcoins at the current output rate.
However, Bitcoin will not have a constant stock-to-flow ratio because Bitcoin halving occurs after every 21,000 Bitcoins are added to the blockchain. Typically, Bitcoin halving occurs approximately every 4 years. Analysts predict that due to the halving event, 21,000 Bitcoins will be produced again in the year 2140.

Fundamental Analysis Tool Example

Instead of manually calculating key fundamental analysis indicators, it is better to use websites that publish these indicators. For fundamental analysis, the best websites include Baserank, Glassnode Studio, Coinigy, CoinMarketCal, Coin Metrics, Cryptovew.ch, and TradingView.

BaseRank: BaseRank is one of the largest guide information sources for investing in crypto assets, as it aggregates statistical data and comments from many professionals in the crypto field, including investors and experts. It provides practical information about teams, investment risks, and asset utility. In addition, it also provides a ranking from 0 to 100 for crypto assets to guide investors in making investment decisions.

Crypto Fees: This website provides an overview of the trading fees for different cryptocurrencies in the past 24 hours and 7 days. As we know, the gas fee on the network is a clear indicator of the demand for cryptocurrencies. Relatively high trading fees often indicate high demand for the asset.

Glassnode Studio: Most traders and investors will use Glassnode Studio because it aggregates fundamental data from various sources, including transaction and mining data, wallet holdings, and price information. Therefore, it enables users to access a variety of analytical information and use it to trade and make investment decisions.

Glassnode Product - Glassnode

Coinigy: With Coinigy, you can create a single interface that combines different wallets and exchange accounts using APIs from different exchanges. With this, you can integrate over 40 cryptocurrency trading platforms including exchanges. In addition, it can also help you trade on various trading platforms and use cryptocurrency chart analysis.

Trading View: Although traders can access the data charts they want to know by subscribing, they can also access free encryption chart indicators. In addition to benefiting from the charts, investors can also get real market dynamics and enjoy other functions. Traders and other investors can exchange information on the forum and watch live videos of experts and analysts. In general, the Trading View community can help most users master key trading skills and knowledge.

Cryptowat.ch: Investors can get market information from over 24 major exchanges, including trading charts. It also aggregates a wealth of data from over 4000 network markets.

CoinMarketCal: Investors need to know some information before investing in crypto assets. For example, they need to understand trend news that affects the price of crypto assets, and this is where CoinMarketCal comes in handy. It provides users with important news and information to help them make important trading decisions. Users can also comment on some of the information.

CoinMarketCal Product - Coincloak

Coin Metrics: Coin Metrics is a cryptographic analysis tool that supports on-chain and off-chain analysis, enabling researchers and analysts to understand the behavior and performance of the cryptographic market. Some of its features support trend visualization. At the same time, it also has a variety of indicators and indices to display the latest developments and trends in the market.

CryptoView.ch: The main function of CryptoView is to display crypto assets in encrypted exchanges, cold storage locations, and third-party digital wallets. It provides quantitative and qualitative data for many exchanges, which can help investors understand the latest developments in the industry.

Conclusion

Traders and investors need to understand the basic principles of trading, as well as how to interpret the prices of crypto assets, in order to invest in profitable blockchain projects and crypto assets. In addition, there are many tools for fundamental analysis and crypto asset trading indicators that investors can use to gain fundamental and in-depth knowledge related to investment.

Common Questions and Answers About Fundamental Analysis

What should I do before buying crypto assets?

Before investing in crypto assets, investors need to do several things in advance. For example, they need to carefully read and understand the relevant project white paper, evaluate how social media channels and their reputations are, and also research the price history of the relevant project. In addition, it is important for traders to analyze their performance by combining the use of various indicators such as market capitalization, trading volume, and supply, using fundamental analysis.

What are the popular indicators in the current cryptocurrency trading?

Traders can use various technical analysis indicators to evaluate the price performance of crypto assets. The most popular indicators currently include moving averages, trading volume, stochastic indicators, relative strength indicators (RSI), and Bollinger Bands. It is recommended that traders combine lagging and leading indicators to make reliable decisions. Price Prediction.

What are some high-quality websites to use for fundamental analysis?

Currently, there are numerous websites that aggregate data from various sources, which we can use to make informed trading decisions. As for fundamental analysis, some of the high-quality websites currently available include BaseRank, Crypto Fees, Glassnode Studio, Coinigy, TradingView, Cryptowatch, CoinMarketCal, Coin Metrics, and CryptoView.ch. Most of these websites include various forms of data, such as charts and graphics, to provide traders with the highest quality and comprehensive information.

What is the form of crypto assets?

Crypto Assets refer to digital assets protected by encryption technology. People cannot duplicate or create counterfeit currencies of this kind. We can use crypto assets as an alternative payment method because they can be securely transferred to others. Bitcoin is the first crypto asset and it is the top 1 coin in terms of market value. Other popular crypto assets include ETH, Tether USDT, Binance Coin ( BNB)、 Cardano, TRON and XRP Wait.

What problems need to be solved for crypto assets?

The main issue with most crypto assets is price volatility. Typically, the price of crypto assets can experience significant drops and surges in a short period of time. Additionally, people may also lose crypto assets due to hacking attacks or by misplacing their private keys and seed phrases.