The one really cool advantage in the crypto market is how much information about bitcoin fundamentals is easily found. Like panning for gold, you have to sift through the sand, silt, rocks and fools gold in order to find a few real nuggets.
Cryptos range anywhere from “shitcoins” to coins that will change the world. So the bitcoin fundamentals are imperative to find out where you are on this scale.
There are 3 critical areas to devote your attention when evaluating bitcoin fundamentals
1. The intrinsic attributes of the coin
2. Devoted following on social media
3. Does the company explain their goals clearly through schedules, whitepapers etc.
A coin has variables when its created that can be diagnosed through some analysis which will point to its potential. Circulating supply is the amount of tokens/coins available to the public to buy or trade.
Take the circulating supply, multiply that by the traded price and you will find the market cap for the coin. If you had 1,000 coins in circulation at $10 each you would have $10,000 market cap.
Total supply is adding the circulated supply
plus the non-circulated which are pre-mined or coins in escrow. If a crypto has 15 million in circulation but
20 million coins total then 25% are not in circulation.
Check out how to arrive at the daily inflation rate of any given crypto
Max supply is the total amount of this coin past and future. Bitcoin as of this writing is at 18 million coins and will only have 21 million mined. 21 million is the max supply of Bitcoin. So the inflation of bitcoin will be minimal and thus the price won't be affected much over time.
In order to find out the inflation of a given coin you have to find out the block production rate. I am looking for a coin with a lower daily inflation below 3%. Also the best prospects are smaller cap coins that have the potential for higher profits of course.
You may wonder what social media has to do with a coin's fundamentals, but it is a great place to find different perspectives from ardent supporters.
Social media is a great place to find the ground swelling support for coins and thus their potential for growth. Facebook, twitter, Instagram are a good start to find out if there is any substance to the coins you may invest in.
Dogecoin is an example of a coin made as a parody of crypto that was promoted by Elon Musk and other celebrities. It shot up in value even though the fundamentals were that of a "shitcoin". Even the creators did not take the coin seriously, but those who were in early made out big. This is now referred to as the "Elon Effect".
Bitcoin talk is another forum that you can find out if a coin is worthy of your money! Social media is unavoidable these day when it comes to popularity and so its very important to do due diligence in these realms!
Finally what does the company say about their coin. Can you find whitepapers to see what problem this coin is solving? Is it simple, to the point information and not complicated jargon? Is it just a retread from another coin that is already out there?
Its important that they have goals set up with specific timelines and that they actually meet those deadlines or close to it. If you go to their page and you find non specific information and it appears to be more fluff then specifics and action, I personally would avoid these coins in most cases.
The fundamentals of a coin are very important as you can see. Crypto is still the wild west and thus there is a lot of potential risk involved as well as potential profits.
Only those who are willing to learn and do their due diligence will succeed. Please sign up for my newsletter as we venture into the fray and hopefully take advantage of this market!
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