What are NFT and crypto analysis tools?
Cryptocurrency prices and NFT project valuations are extremely volatile.
Add to that the high number of scams out there that are robbing everyday investors like you of their funds and Web3 projects can become something of a minefield.
If you want the best chance of making smart decisions, you're going to need to have access tot he best NFT and crypto analysis tools.
What do we mean by analysis tools?
Basically simple tools that give you a transparent view and detailed breakdown of key statistics and information. Those statistics and informations pieces could be anything from...
- The value of the currency you're thinking of investing
- The current state of the market and how valuations are moving
- The NFT whitepaper outlining their long term goals and usability
- The historical information of the project to help you identify if it's all above board
Basically, the details you need to know for due diligence and to make sure you're not investing in the kind of project that will fold in a few months taking your cash with it.
Why do I need NFT and crypto analysis tools?
You need good NFT project information and details crypto analysis tools because Web3 is something of a wild west right now.
There are a lot of projects that are started with the right intentions but aren't built on a stable foundation making them destined for failure.
There are, sadly, even more projects that are set up to fail at your expense and for the benefit of the founders.
And there are also lots of people who jump into projects at the wrong time and see their investments shrink instead of grow.
Having great analysis tools is key to making smart decisions in crypto and Web3. Knowledge is power in this game. The more detail you can get on a project, the less likely you are to get burned by it.
What kind of NFT and crypto analysis should I do?
There are plenty of ways to analyse upcoming crypto projects. however, the methods generally fall into one of two categories.
- Fundamental analysis
- Technical analysis
Here's the difference between the two.
What is fundamental crypto analysis
Fundamental analysis is basically looking at the intrinsic value of the project to make a judgement on it's long term value and usage.
This is a key first step to understanding whether or not a cryptocurrency or NFT project has the potential to last in this volatile space.
There are a lot of different elements that go into fundamental analysis. You're basically looking at the project as a whole to understand if it's worthy of your trust and investment.
You want to run through the below areas to get an overview of the project and what it sets out to achieve. You're looking to see if their goal is - in your opinion - achievable. Do they have the right taslent, and skillset?
As for the long term goal, you want to assess whether it's something that will have real impact int he world and long-term value to many people out there.
Here's a list of what we recommend you look at through fundamental analysis.
Project fundamental analysis
- Team analysis - Who's the team behind the project? Do they have a history of successful projects and are they specialists in what they're trying to achieve? If they've received funding, is it from other brands that are experienced in growing similar projects?
- Project goals - Look into the whitepaper of the project to understand the overview of what they plan to achieve. The document will detail everything from the overall plan and use cases to the technical approach. Often they'll have a roadmap in there as well. You want to assess whether these things will be impactful, useful to users, achievable, and realistic.
- Tokenomics - Tokenomics will help you understand how the brand is planning to distribute and control the supply and demand of the asset. If there's huge supply, demand will fall and with it value. If demand is higher, so too will price. If your crypto analysis reveals that the project has reserved the majority of tokens for the founding team and their backers, it's likely they don't have holders best interest at heart.
- Utility - Is this project something that will have real world impact. It's fun to invest in funny alt-coins and projects, but if they don't solve a problem they have no lasting value. If the project has real-world utility then it will likely hold its value over the long term and attract more users who align their beliefs with the project goal.
- Roadmap - Solid projects always have a roadmap of what they want to achieve. During your analysis, look into the project to understand what that roadmap is. Look at whether you believe the roadmap is achievable with the talent they have and if you believe they're being clear and transparent with milestones.
- Competitors - Use these same analysis tools to look into the competition out there. Try to understand if the project you're investing in has any form of competitive edge over the established players. If there's a lot of competition, that means there's a lot of demand. However, you need something to stand apart from the established players for this project to succeed.
What is technical cryptocurrency analysis?
Technical analysis takes a more detailed approach to understanding the project you're considering investing in.
It's the study of the price movements of any currency and intends to understand where the value of a currency is set to move next. With good technical analysis, you should gain an insight into whether a currency is set to see an increase in value making it a good investment. Or you might see that it's soon set to drop making it an ideal currency to short.
The main goal of technical analysis is to understand...
- How people are interacting with a currency
- How similar changes have affected long-term value in the past
- Whether or not now is the right time for you to invest in that particular currency
Technical analysis isn't for everyone and can be quite difficult to master. However, for serious traders it's the ideal method to truly understand how a cryptocurrency is set to change in value.
A few methods of technical analysis for crypto include.
- Blockchain analysis - Good analysts will look at blockchain metrics to understand things like hash rate for the overall health of the currency, the number of active addresses, transaction value and fees to see if this is in steady circulation.
- Price and value - Many tools offer detailed charting tools to show the value and how it changes day-to-day. You'll need to examine the candlesticks to see how things are moving.
- Trends - In addition to daily candlestick analysis, many traders will look at the overall trend to judge whether the currency is set to continue on it's trajectory or is set for a reversal.
Start your crypto analysis with these tools today
Crypto analysis is a detailed and cnfusing world.
However, having the right tools to analyse cryptocurrencies and NFT projects can save you a ton of hassle and thus help you make more informed decisions.
We can't tell you what's the right project to invest in, but with the crypto analysis platforms outlined here, you should eb in a position to make more informed decisions and smarter choices with your investments.