How to predict cryptocurrency price using fundamental analysis

With cryptocurrencies, one thing is clear: new participants keep entering the market, with the total market capitalisation of all crypto assets reaching around $3.45 trillion as of November 2025 – more than a tenfold increase since early 2020 – spread across more than 20 million cryptocurrencies (CoinMarketCap, 4 November 2025). The industry is expected to reach a global market capitalisation of around $7.98tn by 2030, with an estimated compound annual growth rate (CAGR) of approximately 30.1% (GlobeNewswire, 30 October 2025).

Beyond the figures, crypto continues to attract younger investors. An August 2025 study by JPMorganChase found that most cryptocurrency traders are under forty. Previously, a separate BTC Markets report indicated a 24% increase in 18–24-year-olds investing in cryptocurrency during the 2020–2021 financial year.

However, the NORC study also revealed that 62% of people do not understand cryptocurrency, while 31% cited this lack of knowledge as a reason for not investing.

You might wonder what type of analysis helps explain these movements, and how economic conditions affect cryptocurrency markets. This article outlines how technical and fundamental analysis can help assess and interpret cryptocurrency market behaviour.

Analysing cryptocurrency markets

There are three main types of financial analysis commonly applied across different markets. The practice dates back to the 18th century, when merchants in Japan developed candlestick charts to study rice prices.

• Technical analysis examines historical price movements, chart patterns and statistical indicators.

• Fundamental analysis considers broader influences such as market, economic and political factors.

• Quantitative analysis focuses on historical data, often using ratios such as earnings per share (EPS) or discounted cash flow (DCF). It is typically used in combination with the other two methods.

In cryptocurrency trading, technical and fundamental analysis are complementary tools that help traders interpret how market factors interact – not to predict future outcomes, but to better understand them.

Past performance is not a reliable indicator of future results.

What is fundamental analysis?

Fundamental analysis is a method used to explore the underlying factors that can affect an asset’s value. For cryptocurrencies, this means assessing both quantitative and qualitative elements such as market capitalisation, token utility, project leadership and the overall economic context.

Unlike technical analysis, which focuses on market data and price trends, fundamental analysis looks at broader, often less tangible drivers. It considers external conditions – from monetary policy to regulatory developments – to build a structured understanding of how these factors may influence crypto prices over time.

While technical analysis often focuses on short-term trends, fundamental analysis takes a broader perspective, examining how economic or project-level factors may contribute to long-term market dynamics.

It’s important to note that analysis cannot forecast outcomes. It simply provides context to help traders make more informed, research-based decisions.

Past performance is not a reliable indicator of future results.

The mechanics of fundamental analysis

Two main approaches underpin fundamental analysis:

Top-down analysis begins with the macroeconomic environment and moves towards individual markets or assets. It considers factors such as economic growth, inflation, interest rates, employment, and monetary policy.

Bottom-up analysis focuses on the characteristics of a specific company or asset, including revenue, earnings, or user activity.

In cryptocurrency markets, traditional balance sheet data is usually less relevant. Instead, analysis focuses on crypto-specific parameters such as:

• Market capitalisation
• Circulating and total supply
• Token utility and real-world use cases
• Community size and engagement
• Leadership and governance structure
• Trading volume and liquidity
• Exchange availability and listings
• Partnerships with established institutions
• Regulatory developments
• Market sentiment and operational transparency

It’s important to note that no single metric can determine value. A balanced assessment combines multiple data points and qualitative insights. Reviewing a project’s whitepaper can also help clarify its objectives and underlying purpose.

Blockchain metrics

Blockchain data provides additional insight into a cryptocurrency’s network performance and overall functionality. Metrics such as the hash rate – the total computational power securing the network – can indicate levels of network activity, though changes may reflect several factors, including energy costs, hardware efficiency or miner participation, rather than investor sentiment alone.

Other relevant indicators include user adoption trends, transaction volume and on-chain activity. Media coverage and sentiment analysis can also influence perception. Announcements such as new partnerships or technical upgrades may attract interest, while regulatory updates can affect demand.

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