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What are fundamental analysis and technical analysis?

2025-07-29 13:28:24
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How to operate base script analysis?

Through fundamental analysis, you can decide whether an asset is overvalued or undervalued based on your view of the asset\'s intrinsic value, that is, will it be more useful in the future? Let\'s take Ethereum as an example. Most decentralized finance (or DeFi) applications run on its blockchain. If you think DeFi will grow, you might guess that Ethereum\'s value will rise in the future.

How to operate technical analysis?

1. Technical analysis is more of a digitally driven decision-making method. It assumes that the market already reflects all currently known information through current prices (you can find it on the Coinbase app or many other online resources) and trading activity volume (check cryptocurrency data websites such as Nomics and CoinGecko).

2. Since current prices reflect market forces such as supply and demand, the school of technical analysis believes that the price of an asset should allow you to immediately understand the public\'s perception of it. This is called market sentiment and is an indicator used by traders to predict trends and make investment decisions.

Why are they important?

Unless you have access to advanced models and tools used by professional traders, using these two strategies together can provide a more complete view of trading. Fundamental analysis focuses on more objectively indicating the potential long-term value of assets, such as network activities, use cases, business models and roadmaps, while technical analysis focuses on the asset\'s market performance.

On the other hand, professional traders may rely heavily on one of these technologies. (Large, mature markets often have a large number of traders of both types.) For example, traders may use computer models to perform technical analysis to delve into price and volume changes, including regressions, relative strength indices, and stock market data. If a given asset tends to experience fairly regular boom and bust cycles, technical analysis can give investors insight into the rhythm of those cycles, thereby helping them see opportunities to take advantage of these short cycles.

Please note...

1. It is very difficult to implement a successful short-term investment strategy. History doesn\'t repeat itself, so studying price patterns won\'t necessarily help you make strong predictions, especially in volatile markets.

2. You should invest within your affordability. Financial advisers can help you develop strategies and understand the risks associated with investing in cryptocurrencies.

Disclaimer:

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