Fundamental analysis (FA) measures the value of an asset by evaluating its Intrinsic value based on its financial situation and current market and economic conditions.

Fundamental analysis is a method of evaluating a security, such as a stock, bond, or cryptocurrency, by analyzing its underlying economic and financial factors. The goal of fundamental analysis is to determine a security’s intrinsic value, which is the true worth of the security based on its underlying fundamentals, such as its earnings, assets, and management.

Fundamental analysts examine a wide range of factors to determine a security’s intrinsic value, including:

• Earnings: They look at a company’s financial statements, such as its income statement, balance sheet, and cash flow statement to determine its profitability and financial health.
• Assets: They examine a company’s assets, such as its tangible and intangible assets, to determine their value and potential for generating future income.
• Management: They evaluate the quality of a company’s management team, including its leadership, strategy, and track record.
• Industry and Market: They analyze the broader economic and market conditions in which a company operates and how it may impact the company’s performance.

Once a fundamental analyst has determined a security’s intrinsic value, they can compare it to its current market price to determine if the security is undervalued or overvalued. If the intrinsic value is higher than the current market price, the security may be considered undervalued, and a potential buy opportunity. Conversely, if the intrinsic value is lower than the current market price, the security may be considered overvalued, and a potential sell opportunity.

It is worth mentioning that in the case of decentralized finance (DeFi) projects, fundamental analysis can be a bit different as it might involve evaluating smart contracts, tokenomics and underlying protocols.

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