fundamental analysis is the analysis of the health of the financial statements of a business. In accounting and finance, the analysis of assets, liabilities, competitors, and revenues from market activity.
It considers the general state of the economy and the influencing factors such as interest rate, production, income, employment, gross domestic product, housing, production, and management.
Two Basic Approaches
Consequently, two basic approaches are usable in bottom-up analysis and top-down analysis. Which of the types of analysis can provide better results and more profitability in this market? It requires the acquisition of sufficient knowledge of this market. This subject is one of the most interesting topics for those who are interested in financial markets. On the other hand, we can say that in the financial market of digital currency, even whales who have a large percentage of the market volume, when they rapidly make large-scale movements in the market, will cause turbulent movements.
Simultaneously, historical and current data are considered in fundamental analysis. However, future financial projections are the goal. For instance, fundamentalists’ analysis considered the objectives in the:
– Evaluation of companies’ shares and prediction of possible changes in their price.
– Predicting the business performance of oneself and competitors.
– evaluate the management at the macro level and related factors.
– helping to make internal business decisions and/or calculating its credit risk.
– Realizing the intrinsic value of the share.