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Fundamental analysis is one of the key asset valuation tools used in both traditional and cryptocurrency markets.
Unlike technical analysis, which focuses on charts and patterns, it helps to understand what the value of an asset is based on: from the financial performance of the project to the macroeconomic situation.
Coinpaper's editorial team looked into how the fundamental approach works, what parameters investors take into account, and whether it can help make money in a highly volatile crypto market.
What is fundamental analysis: essence and meaning
Fundamental analysis is a method of assessing the value of an asset through the study of economic and financial indicators. It helps participants in the crypto industry to understand whether a token has real value and growth potential. Fundamental analysis in simple words can be explained as an attempt to "look behind the price tag" of an asset, to determine its economic base, prospects and opportunities.
Unlike technical analysis, which focuses on charts and historical prices, the fundamental approach takes into account the state of the economy or the market as a whole, demand, the potential of the proposed technology, financial metrics of the project, development activity and other indicators.
For example, if a company publishes a report with earnings above expectations, this can cause its stock to rise - investors take this as a signal of strong prospects. Conversely, weak figures can cause the price to fall. In the crypto market, everything works according to the same principles, but with the evaluation of other factors - the development of a new technology or a strategic partnership.
Key indicators of fundamental analysis
The fundamental approach allows you to assess the "real" value of assets, whether they are shares of companies or digital tokens. To do so, it uses a whole set of metrics that reflect the financial health of a project or issuer. Key fundamental analysis metrics include:
- P/E (price/earnings ratio) is one of the most common indicators in the stock market. It shows how much investors are willing to pay for each dollar of profit of the company. A high value indicates expectations of future growth, while a low value may indicate undervaluation of the stock or financial problems of the project;
- EPS (earnings per share) - reflects how much profit is distributed per share. It allows to assess the sustainability of the business and its ability to generate income, which is especially important for dividend investors;
- Revenue- the total income of a company from its core business. Stable revenue growth indicates high demand for a product or service and a stable position in the market;
- D/E (debt ratio)- reflects the ratio of debt and equity. A high ratio means that the company is actively using debt financing, which may increase risks for investors.
The company's fundamentals can be found on resources like Yahoo Finance, Bloomberg or Morningstar, which provide access to financial reports and analytics.
Example: Tesla's April 2025 P/E ratio is 126.42 - investors pay $126 for every dollar of earnings. That reflects high expectations for the company's future and its technological innovation. At the same time, Ford has this metric at 5.08, while General Motors has 4.45, indicating lower growth expectations compared to Tesla.
In the crypto industry, the main indicators of fundamental analysis are the number of network users, product quality, news about project development, developer activity and information about new partnerships. These parameters allow us to judge the demand, dynamics and potential of a particular token.
Fundamental analysis of stocks and companies: how it works
Fundamental analysis of stocks involves several key steps, each of which provides a deeper understanding of a company's sustainability, prospects, and ability to grow in current market conditions.
Macroeconomic analysis
Examine the global and local economic environment in which the company operates. This includes inflation, central bank rates, currency exchange rates, unemployment rates, fiscal and monetary policy. These factors set the general background and can significantly affect the business of even the largest players. For example, an increase in the key rate restrains consumer activity, while a sharp currency devaluation may reduce demand for imported products.
Industry analysis
An assessment of the sector in which the company operates. This includes examining trends, assessing growth rates, degree of saturation, level of competition and barriers to entry. For example, if the industry is mature and highly competitive, a new or small player has less room for expansion without a unique product or aggressive marketing strategy.
Financial analysis
A detailed study of the metrics already mentioned: profit, revenue, profitability, debt level, capital expenditures. These metrics provide insight into how well the business is performing and whether it can scale. Stable cash flow and a low debt burden are signs of resilience, especially in a volatile market.
Innovation potential
One of the most important stages of the assessment, especially for technology companies. It takes into account investments in research and development, patents, technological breakthroughs, unique solutions, and the pace of new product introductions. Apple is the best example for fundamental analysis of US stocks. By constantly improving products and creating new categories of devices, the company keeps its audience interested and increases its market capitalization.
Competitor Assessment
Analyzing a company's stock also includes assessing the strengths and weaknesses of other players in the same segment. This is necessary to understand where the target company stands in the industry. For example, Apple and Samsung are two tech giants competing in the smartphone segment. Despite similar product offerings, the companies' approaches to design, marketing, and ecosystem are different. It is also important to compare brand awareness, customer base, sales channels and business model.
Information background and expectations
External events can play a key role. The publication of a quarterly report, announcement of new products, rumors of mergers or information leaks - all this can affect quotations in the short and medium term. Positive news can provoke growth, while negative news, on the contrary, can bring down quotations. Shares of high-tech companies and tokens of blockchain projects are particularly sensitive to this.
Thus, qualitative fundamental analysis is not about a set of formulas and ratios, but rather about a comprehensive approach that helps an investor to see the whole picture: from the state of the global economy to the nuances of management within a particular project.
Application of fundamental analysis in different markets
Fundamental analysis can be applied to different asset classes, but the emphasis and priority metrics will vary from market to market. This is due to the different nature of the assets: while in equities, the business model and reporting play a key role, in cryptocurrencies the community and technological implementation come to the fore. Let's consider the specifics of the approach in each area.
Stock market
Fundamental analysis of the stock market can be called "classical". Here investors study the intrinsic value of a company to understand how the current share price corresponds to the real potential. This approach is relevant for those who are focused on long-term investments and cannot rely only on volatility or tech analysis.
In practice, the analysis is organized around four key parameters:
- Earnings per share;
- price to earnings ratio;
- debt load;
- free cash flow.
Based on this data, it is possible to draw conclusions about the profitability of the company, the sustainability of its model and the feasibility of investments. This approach is particularly effective when combined with an analysis of the sector and macroeconomic conditions.
Foreign Exchange Market (Forex)
Fundamental analysis of currency markets is used to assess supply and demand on the scale of entire countries. The dynamics of exchange rates here often depend not on private players, but on the decisions of regulators and global macro-processes. Traders primarily monitor:
- central bank actions;
- inflation rates;
- economic statistics;
- political stability.
This analysis allows us to understand which currency will be more attractive under the current or expected economic background. It does not replace the technical approach, but answers the question of "why" the market is moving in one direction or another.
Cryptocurrency market
Cryptocurrencies are a rather specific asset category that requires a slightly different approach. There are no reports and revenue indicators in the usual sense, and access to many data is partially or completely closed. Instead, fundamental market analysis includes project dynamics, demand for their product and sustainability in a volatile environment. Key benchmarks remain:
- user activity;
- technical development;
- tokenomics;
- Market and technology partnerships.
These parameters form a picture of a project's maturity, relevance and growth potential. Unlike traditional markets, community sentiment and reaction to news stories also play an important role. Therefore, analysis in the crypto industry should always take into account both "numbers" and context.
How to start using fundamental analysis: tips for beginners
For a novice investor, fundamental analysis may seem complicated and overloaded with terms. But in practice, fundamental analysis methods are some of the most logical and consistent, and can be mastered without significant trading or investment experience. Here are some tips that will allow beginners to master this method faster.
Gather basic information
When it comes to the stock market, start by looking at company financial statements: look at earnings, net income, debt, profitability. This data can be found in annual reports, quarterly statements or on platforms like Yahoo Finance and Google Finance.
In the case of crypto projects, the main focus should be on the activity of the development team, community interaction, updates on GitHub, level of media presence and tokenization. It is important to understand how "live" the project is, whether it is technically supported and how transparent it is in communication.
Compare your findings with your competitors
Don't analyze an asset in a vacuum - its performance is always contextualized. If it's a stock, look at the performance of similar companies in the industry. If it's a blockchain project, look at other products in the same category - for example, other L1 or DeFi protocols. Compare their user metrics, volumes, number of partnerships and media support. This will help you see how strong an asset's market position is and if it has a chance to stand out.
Master tools that make analysis easier
Instead of searching for data manually, use aggregators. For stocks, such services as TradingView and Yahoo Finance are suitable, for cryptocurrencies - DefiLlama, Dune, Cryptorank and others. You should master it gradually - starting with simple dashboards and charts, and moving on to deeper slices of data.
Follow news and expert opinions
Often it is information from specialized media, interviews with founders, or comments from analysts that help you understand what prospects a project or company has. Subscribe to reliable sources, including industry Telegram channels, blogs of teams and famous X users.
And the main thing is to start with a simple one. It is better to choose one understandable project or company and go through all the stages of fundamental analysis than to splurge on dozens of assets. Large companies or projects with a transparent structure and a long history are an excellent start for practicing.
Frequently Asked Questions
Can fundamental analysis be used for short-term trading?
Fundamental analysis is primarily focused on long-term investments. It helps to determine the intrinsic value of an asset and assess its prospects within months or years. Technical analysis is better suited for short-term trading.
How do you realize that a company is undervalued?
An undervalued company is one whose market price is below its intrinsic value. This can manifest itself in good earnings and a low debt load with a relatively low share price. Such inconsistencies can be identified through fundamental metrics.
How long does it take to master fundamental analysis?
Basic skills - understanding key metrics and reading reports - can be mastered in a few weeks with regular practice. But applying the analysis to a wide range of assets will take more time, especially when it comes to the crypto market and its specifics.
Does fundamental analysis work for cryptocurrencies like bitcoin?
Yes, but with caveats. Cryptocurrencies do not have classic profit and loss reports, so the analysis is based on other parameters: demand, technology, user activity and community reaction.
Where do I get data if I'm just starting out?
For stocks, platforms like Yahoo Finance, Google Finance and TradingView are good. In the crypto industry, aggregators and dashboards like Cryptorank, DefiLlama, Dune and others are used. These services are free and are suitable for the first steps in fundamental analysis.
