This article has been translated from English to Gen Z Slang.
So, just like I said in an past lesson, one of the main rules of trading is to “Get to know the market you're trading in, fam.”
And to vibe with the market you're trading in, you need to flex on fundamental analysis (FA).
Doing FA is clutch in the crypto world since we're still in the early stages of this whole blockchain shebang. 🚀
If you're not up to speed on the latest crypto tea, your trading bank could take an L. 💔
By skipping out on fundamental analysis to weed out weak projects, you're basically setting yourself up to flop, just saying. 😬
What's fundamental analysis, anyway? 🤔
Fundamental analysis (FA) is when you try to figure out an asset's “intrinsic value” – fancy words for trying to see how much it's actually worth.
The whole point of FA is to decide if an asset's a baddie (overvalued) or a steal (undervalued).You do this by digging into all the deets about a crypto project (its “fundamentals“) that are around, like user base size, IRL applications, and maybe how it might pop off in the future.
You'll also want to check out stuff outside the crypto bubble, like the vibe in the financial markets 🌍, what's happening in the economy, geopolitical drama, and regulatory risks.
All this intel helps you decide if a crypto asset's a bougie expense 💎 or a thrifty deal 💰 compared to its current price tag.
The general mood is that an asset will eventually spill the tea on its “intrinsic value” over time. So, if your fundamental analysis suggests the market's sleeping on it (or overhyping it), that could be your chance to make a move! 🔥
For instance, if you think a crypto is being slept on in the market because it's got mad future potential nobody sees yet, you can trade on those vibes and hopefully snag some gains. 💸
Using fundamental analysis like a boss 🧠
When I'm working that FA, I gather all the tea necessary to get the big picture of the market and find out which assets are a mood to trade in that scene.
Then I do a deep dive into those lit assets and figure out if I'm feeling bullish (positive vibes) or bearish (negative vibes) about its price, plus I spot any major events that might boost the price my way.
This whole journey starts by peeping the project's whitepaper and catching those official updates.It's like, not that deep, since most real crypto projects have a site, forums, and official spots on socials (Twitter, Reddit), chat apps (Telegram, Discord), and blogs like Medium or Substack.
At the very least, a crypto project's gotta come through with:
- A unique fix for an IRL problem. 💡
- A clear AF roadmap with deets on how they'll build their solution. 🗺️
- A crew of seasoned devs that can get stuff done. 🖥️
- Lit tokenomics (like, how it's allocated, distributed, supply, incentives, etc.). 📈
Once I've got that basic knowledge, I keep tabs on the project/token regularly, checking their media channels (daily or weekly) and crypto news sites.
Lost on where to start? Bro, just hit up Google. Even a simple search might drop some fresh articles if anything new happened. 🤷♀️
Also, get the 411 on the broader crypto vibes by peeping news and price moves in the big dogs: bitcoin (BTC) and ether (ETH). 🤑
Moves in these markets are like, major, and can spill over into the rest of the crypto scene, so it's a good flex to see what these crypto “blue chips” are up to as well. ✨
Lastly, don't sleep on the titanic macro themes like global growth, inflation tea, and what global money peeps are cooking up in terms of policies. Big risks like wars or pandemics? Yeah, gotta stay woke on those too. 🌎
Track all those big moments (like if there's a huge price reaction tied to a known event), jot down your thoughts and market behavior in your trading journal.
If you're just getting your feet wet, our daily/weekly news and watchlist articles on BabyPips.com are there for the assist.This isn't just about understanding market feels or bias, but it can also be your go-to when tweaking your trades or evaluating them later. We'll cover more on trading journals in a future lesson. 📓
Breakdown of a trade idea ✨
After doing the homework on your fave crypto, the crypto scene, the wide financial landscape, and spotting potential price push factors, you've probably got just enough for a trade idea (or “thesis”) and how sure you are about it.
A trade idea's got your vibe check (are you bullish or bearish?), your reasons for those vibes, and how you wanna play this out as a bet or trade (Are you getting cozy or distancing yourself?).
If you've cooked up what you think is a fire trade idea, a cool exercise is answering these questions (or whatever else you think's relevant):
- What's the main story or hype that's gonna boost demand for this crypto or make traders run away from it?
- How long could this main narrative be trending? 😎
- Have we already seen the hype's price reflected? (Like, did a big ol' price jump happen recently for no reason?)
- What future events might change or back up the community's feel about the crypto?
- Have we seen this setup play out before? How'd it go last time? What's different now? 🤷♂️
- Does how you analyze this specific crypto line up with the current crypto market vibes? What about the big world market feels? If not, will it still swim against the tide? 🌊
With these questions, you're trying to guess what's gonna actually go down (more than one path's possible), the crowd behavior around your thesis, and if the cosmic market vibes support or block the price action of your asset.
Answering the above will guide you on how strongly you feel about your trade idea/globalist vibes. 💪
No strict rules for nailing down your confidence level (unless you’re crunching numbers like a pro with heavy data), it's more about the gut feeling after doing all your fundamental homework, seeing your results, and having that market savvy. 📊
Let's talk trade idea: Poopoocoin (PPC) 🚀
Imagine you're eyeing Poopoocoin (PPC), the new spicy utility token flaunting super fast transactions compared to them other blockchains.🔥
Their catchphrase is catchy AF, “Poopoocoin is fast as sh*t!” 😂
After diving deep, you find that over the past year, they bagged 100 new software squads doing the most in DeFi, NFTs, Web3, you name it. Plus, their token’s about to start shedding supply soon. 📉
That's a whole lotta bullish notes likely giving it a 50% shot of booming demand, am I right? 💥
And if a big institution’s planning to grab and hold down 30% of the tokens next quarter, doesn’t that crank up your bullish vibes to a 70% chance of prices shooting up from where they are now? Ya feel me? 😜
Clearly, it ain't an exact science, but it's a lit practice and a crucial part of your strategy for rolling out your cash and managing risks later. 💼