Cryptocurrency Basics: Fundamental Analysis

Trading fundamentals are key price determinants which can be analyzed to evaluate the intrinsic value of a cryptocurrency. This analysis involves examining factors including the coin’s functional benefit, community backing, supply and demand, to determine the likely value of the cryptocurrency. This information thereby equips investors with a powerful tool to guide their purchasing and selling decisions.

Fundamental analysis on cryptocurrency is a unique process as this currency is still in its developmental stage and has a limited track record to show. Therefore, more extensive research is necessary to determine the viability and potential of a coin if you want to learn exactly how to pick only the best new projects.

Want to take your crypto trading to the next level? Get started with the Blockcircle cryptocurrency class here.

Finding sources of information

It is important to ensure the reliability of the information you are using to conduct your financial analysis. There are a number of sources we suggest you explore when gathering information about different coins.


There are a number of great free Telegram channels that provide a constant stream of information about new cryptocurrency projects. My two favorites are:



Coincheckup is a cryptocurrency analysis and research platform. It was designed with the goal of providing transparent information to investors on each cryptocurrency. This information provides a helpful starting place for investors to analyze whether the coin is likely to be a beneficial investment.

Coin’s white paper

A coin’s white paper is a detailed proposal which outlines the purpose and mechanics of the cryptocurrency. Consequently, this is the primary source of information which can be used to conduct a fundamental analysis of the coin. Reading the coin’s white paper alone, may not be the only source of information you need to consult. White papers can be quite complex and technical and therefore further research is necessary to ensure a clear understanding of the coin’s fundamental analysis can be gained.

Coin’s slack channel or blog

It is a great idea to join the slack channel for the coin you are considering investing in. Their slack channel operates as the official and main channel of communication for the core development team and is the place where community members can interact with this team. Additionally, it is a good idea to research whether the coin has an official blog as this can be an excellent source of updates from developers and key investors.

Community Forums including Reddit and Bitcointalk

Forums such as Reddit and Bitcoin talk are also a major source of information when conducting fundamental analysis. These community forums can provide a clear understanding of the sentiments and the community’s opinion on the coin. Forums are also an excellent place to gain a breakdown of the mechanisms of the coin which are not technical and are easy to understand.


Google is another high-quality source of information relating to a coin. Search for anything that you can find on the company. Pay specific attention to published articles, news, and interviews to ensure the information you are sourcing is reliable.

Fundamental values to be analyzed

Qualitative Cryptocurrency Values:

Company Strength

It is important to consider the background of the company who has developed the cryptocurrency. Primarily, it is necessary to consider the company’s previous accomplishments, the strength of the leadership team and the team’s capacity for diversification. This will help to determine the strength of the business and consequently the likely strength of the coin itself.

It is also important to analyze the company’s other main products. It is important to consider the transparency of these products and their status, as this can provide insight into their cryptocurrency. If the company’s other products are faring well, this is evidence that their coin may also be a viable investment.

Questions to evaluate company strength:

  1. Is the team made up of an experienced selection of experts?
  2. Does that team have a track record of high performance and success?
  3. Does the project have experienced advisors?
  4. Are the company’s other main products successful?

Functional Benefits Of The Cryptocurrency

It is necessary to consider the functional value of the coin, meaning its usefulness and purpose. A coin needs a strong purpose which encourages people to invest, otherwise, the market price will fall as soon as the hype surrounding the new coin dies down. This is what is meant when people within the cryptocurrency community say that a cryptocurrency bubble has popped.  Thus, it is important to consider; if the company’s cryptocurrency is linked and integral to the success of their other projects.

Questions to evaluate the functional value of a coin:

  1. Does the coin have a strong purpose?
  2. Does the coin linked to the success of the company’s projects?
  3. Does this coin fill a need in the cryptocurrency market?

User activity and relationship with the brand

Consideration should be given to the community following behind a coin. The best way to gauge this is to examine the traffic on a coin’s website, social media and google searches. Community platforms such as Reddit and slack are also great places to analyze the community’s views about a coin. Additionally, it is also necessary to look at the communication style the team behind the coin and see whether they communicate openly and are transparent with their investors. The main reason this is important is that the cryptocurrency market is predominantly driven by the community and their investment choices. Thus, consideration of the community’s sentiments surrounding the coin is necessary to determine if a coin’s success will be sustained into the future.

Questions to evaluate the coin’s community engagement:

  1. Does the coin have a lot of traffic on its website?
  2. Is the coin discussed positively on Reddit, Slack, and social media?
  3. Does the team communicate openly and transparently with investors?

Critical Economic Events

It should also be considered if there are likely economic events, societal changes or technological innovations which will challenge the success of the company’s projects and in turn their coin. Economic events have considerable influence over cryptocurrency prices. Such events can have a clear and easily recognizable impact on the future supply rate of the currency. Additionally, high profile hacks on major exchanges can also impact the future supply rate of the currency. It can influence price and governmental legislative decisions regarding regulating cryptocurrency. Finally, unrelated events including financial and economic challenges in a country can result in price decreases or increases in a coin.

Questions to evaluate the likelihood of negative economic events:

  1. Does the company prioritize security for their coin?
  2. What is the political climate regarding regulating cryptocurrency and this particular coin?
  3. Is the country where this coin is based, likely to have a strong financial future?

Quantitative Cryptocurrency Values

Supply Of The Coin

The first quantitative analysis which should be considered is the supply of the cryptocurrency. A unique characteristic of cryptocurrency is that there is a fixed supply of currency. Therefore, cryptocurrency has a fixed and predictable total supply volume, which cannot simply be increased, unlike fiat currency, where central banks can generate more supply. The supply of the coin is important to examine when investing. If the supply is low, then the coin will be in high demand and thus be more valuable.

Questions to evaluate cryptocurrency supply:

  1. Is there a low supply of the coin?
  2. Is there enough supply to provide you adequate investment opportunities?

Demand Of The Coin

Transaction availability

One key factor which determines the demand of a coin is its transaction availability. It is important to consider a variety of opportunities to use cryptocurrency. The number of transaction opportunities for cryptocurrency and the frequency of crypto transactions has increased significantly in recent years. There is now a range of organizations accept cryptocurrency including Dell, Microsoft, Paypal, Spotify, and Amazon.

Questions to evaluate cryptocurrency transaction availability:

  1. Is the coin accepted at a range of organizations?
  2. Are these organizations successful and high profile?
  3. Are these organizations ones you frequently engage with?

Trading volume

The trading volume of cryptocurrency has increased significantly. For example, within six years the trading volume of bitcoin increased from less than 2,000 BTC to 60 million BTC. It is important to consider if the coin you are planning to invest in, has a strong demand with significant room to grow. One way to determine this is to consider if the coin meets a specific purpose, whether its demand will increase along with the success of the company’s other projects and therefore whether the currency is likely to gain a strong following. This will help to suggest whether there is likely to be a high demand for the coin and if the coin’s price will likely remain high or at least stable.

Questions to evaluate cryptocurrency trading volume:

  1. Is there a strong demand for the coin?
  2. Does the coin meet a specific purpose?
  3. Is the coin linked to the success of the company’s projects?


Next Step

Now that you have a sound understanding of fundamental analysis values and where to find sources of information, you are now ready to explore technical analysis. Both types of analysis are imperative to consider both types of analysis to make well-informed decisions about your newest cryptocurrency investment. Join us for free training on how to maximize your profits and take your trading to a new level