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When investing or trading cryptocurrencies, it is necessary to have methods that guide our decisions. Many terminologies and concepts can initially confuse novice investors.

That is why this guide will explain, in a simple way, well-known concepts and strategies in the world of crypto trading that help investors make better decisions.

Fundamental, Technical and On-chain Analysis, why bother?

Why use them is simple: trading is not a casino. You can not leave everything to chance. That is why it is possible to estimate what is most likely to happen with the price through facts, data, and metrics.

In addition, the world of cryptocurrencies is very volatile, entire projects can disappear in a day with the same speed with which they became famous, and in both the fundamental and technical analysis metrics, we can find signs that will tell us if we are facing a scam or an investment opportunity.

On the other hand, we are talking about financial assets that are not the traditional ones, which is why the essential financial analysis tools are not only enough. Here comes into play a new type of analysis called: "On-Chain Analysis," which applies only to cryptocurrencies and is focused on how the token and its blockchain are made.

Fundamental Analysis 

Analysis of cryptocurrencies is a complex process for those just starting. There are thousands of projects with features and tons of technical details, making it hard to conclude which cryptocurrencies are better.

The idea is similar to doing a fundamental analysis of companies in the stock market. In this case, the difference lies in the characteristics 
to consideration.

Project Analysis

In this part of the fundamental analysis, the idea is to provide context for the project. Some of the questions we have to answer are understanding what it does, what problems it solves, or who its competitors are.


The first thing to do in a fundamental cryptocurrency analysis is to answer specific questions that will clarify how the project works at a technical and economic level. Some questions may be:

  • Who will use the cryptocurrency?
  • Is the project a practical application?
  • Do the tokens represent something of value? 
  • What about the ones that are in circulation?
  • What problem does it solve?
  • Will people use it?

Some can be very subjective, but as we gain experience, we can answer more accurately.


The characteristics of a cryptocurrency determine the sector or subsector to which they belong. Knowing your industry will help you better answer the above questions and position yourself about your competitors.

Some of the most important sectors are:

  • Smart contract
  • Decentralized Oracle
  • Delphi
  • Exchanges and Decentralized Exchanges
  • NFT


Once we know the industry to which it belongs, we can see what other similar projects exist and which ones are the leaders and determine their competitive advantage.

A project can be unique, its value proposition is consistent, and its usefulness is actual. This situation can be a very positive sign.


Knowing the people behind the project is very important. Perhaps looking at their names, we cannot draw many conclusions. Still, if we investigate, we can see what projects they have worked on, if they have been successful, or if they have been involved in scams or questionable projects.


A roadmap is a plan that shows a project's short- and long-term goals, indicating an estimate of the date by which the goals can be met.

It lets you quickly get an overview of the project and verify that the actual development matches the estimates initially made.

Token Metrics

This part of fundamental cryptocurrency analysis is quantitative and focuses on evaluating a few metrics.

Token Metrics.png

Market capitalization 

It is the leading financial indicator to which we must refer. Market capitalization is obtained by multiplying the supply of coins or tokens in circulation by their price. It gives us an idea of ​​the economic value of the project.

Market cap.png

Generally speaking, a small capital project will have higher growth potential. In contrast, a large-cap asset like Ethereum, which has less room for growth, is a more stable project with a better development team and a more mature market.


Liquidity is the ease with which a cryptocurrency can be converted into money or other cryptocurrencies.

Like any other market, the cryptocurrency market is driven by supply and demand. For you to sell cryptocurrency, a buyer must want to acquire it. Buying cryptocurrencies in liquid markets is much easier because orders are filled faster.


Also, if we are in a cryptocurrency with very little liquidity, we may have difficulty selling it and making a profit. One way to understand liquidity is to check the trading volume on Coinmarketcap.

Circulating Supply

Supply Circulating supply is the amount of a cryptocurrency or token in circulation and the hands of the public. This amount may vary over time, depending on the characteristics of the cryptocurrency and its issuance pattern.

Circulating supply.png

The idea is to know its inflation rate since if it is very high, our currency will depreciate rapidly as the number of units in circulation increases. Other important figures that can give us an idea of ​​its inflation rate are:

  • Total Supply: this refers to the total amount of coins existing at the same time minus the total amount of coins that have been burned
  • Maximum Supply: the total amount of currencies that will exist in the future.

Technical Analysis 

Technical analysis is the study of a set of historical data on the evolution of the price of an asset, in this case, a cryptocurrency.

The main objective of technical analysis is not to "guess" whether the price will go up or down but to identify patterns and determine probabilities about future price movements using technical analysis tools such as candlestick charts or indicators.

Japanese candlestick chart

The development of the historical movement of the price of a cryptocurrency can be represented in various ways, through bars, lines, and with Japanese candlesticks. Japanese candlestick charts are the most widely used for their ease of reading and information.

Japanese candlestick chart.png

The Japanese candles themselves provide us with detailed information in a certain period of these four parameters:

  • Opening price.
  • Maximum price reached.
  • Minimum price reached.
  • Closing price.

One of the primary uses of this information is that the trader can detect the small and large-scale behavior of the price movement. That is, the candles provide us with a type of information individually or by joining several of them.

On the other hand, we will have a much more general view when we zoom out and look at the entire graph as a whole. In this way, we can determine trends (bullish or bearish) or observe if the price moves laterally.

Trend lines

Trends are a fundamental part of trading Bitcoin, Ethereum, or any cryptocurrency as the market moves in very marked cycles.

Trend lines.png

Trends are depicted on charts and are nothing more than the dominant pattern that price develops on any time scale. It will be bullish if the price increases gradually over time and bearish if the opposite happens, so it falls steadily.

The use of trend lines allows a very visual way to draw the bullish, bearish, or lateral trends on the charts and draw them.


Technical indicators are formulas or mathematical calculations that are applied to the price chart of a cryptocurrency to obtain more profound and detailed information.

When the trader uses the indicators correctly, he increases the reliability of his analysis. Therefore, his decision-making will be more suitable for his strategy.

There is a wide variety of indicators available, all of them with different characteristics and with a specific utility.

Traders decide which indicator to use based on their strategy, knowledge, and the market they are trading on. In the case of cryptocurrencies, we will talk about two that are very useful and provide us with basic information in a simple way.

Moving averages

One of the most used indicators is moving averages due to their simplicity and valuable information.

The moving average is a line that indicates the average price of the crypto asset in a given period.

Moving averages.png

This is very useful because having an average price line eliminates the "noise" that causes volatility. In cryptocurrencies, it is very high.

Another benefit of this indicator is that they tell you what the dominant trend is and the price areas of interest to traders. In this case, it can be seen how a simple moving average of 200 periods reflects a ceiling in BTC every time the price tries to approach the line.


Another very useful indicator is volume, which indicates the number of cryptocurrencies traded in a given period.

Knowing that amount allows the trader to know what demand a cryptocurrency has because the higher the trading volume, the higher the interest.

Also, with volume, they can anticipate changes in price trends because when traders become interested in a cryptocurrency, it is reflected in its increasing importance.

These are just two of the most used indicators. There is no better indicator than another, and none is 100% foolproof.

The reliability of technical analysis will always depend on how it has been applied and on the strategy as a whole.

Graphic Patterns 

They are figures that the price forms on its graph, being recognizable by joining points in the price using straight lines.

Pattern identification is a handy skill for traders, as recognizing patterns indicates where the potential entry or exit points of trade are and what direction the price is most likely to take.

There are several chart patterns, but this time we will talk about the most common:

  • Triangles.
  • Pennants.
  • Shoulder-Head-Shoulder


It is one of the most traded chart patterns due to its simplicity.

Triangles are areas where the price moves within a smaller and smaller range and then finally breaks out of that range higher or lower.

There are three types of triangles: symmetrical, ascending, and descending.

The ascending triangle comprises a horizontal upper line and a lower linear line formed by significant lows.


The descending triangle comprises a lower horizontal line and an upper line forming minor highs.


In the case of the symmetrical triangle, all its sides are practically equal, indicating a balance between buyers and sellers.



It is a trend continuation pattern.

It forms after a sharp vertical movement of the price (resembling a flagpole). It enters a "diagonal channel" in the opposite direction to the initial training to finally make the breakout in the same direction as the beginning of the movement.

There are two types of pennants, bullish and bearish.

The bullish is when there is an aggressive rise in price and then begins to fall diagonally, drawing a kind of flag. The trader will look for the breakout to the upside when the "flag" is removed.


In the bearish one, the opposite occurs. The aggressive vertical movement is downward, then draws an ascending diagonal channel and ends up breaking below in continuity with the initial move.



It is named for its resemblance to the upper part of the human torso.

This figure is made up of three consecutive pyramids from left to the right.


Starting with a small one that would be a "shoulder," then a larger one that represents the "head," and ends with another small one of a size equal to the first one that acts as the second "shoulder."

This pattern indicates to the trader a change in direction in the dominant trend of cryptocurrency.

Support and Resistance 

And resistance is the primary tool of technical analysis and allows multiple strategies to be created around these concepts.

They are areas where price has a high probability of finding a solid rejection on its way up and, therefore, turning around.

Support and resistance levels are not specific prices but price ranges.


They are areas located below the current price in which there is a great intention to buy by market operators.


This means that when the price falls and reaches that zone, there will be a greater buying force than selling. Therefore, the price will bounce upwards.

Hence its name, as it acts as a support by stopping the downward movement of the price.


They are the exact opposite of supports.

Areas located above the current price where there is a solid intention to sell. When the price reaches these zones, it encounters intense selling pressure causing the price to bounce back down.


It should be noted that in support and resistance, the price does not always return; there are cases where the price pierces these areas and continues its journey.

Offer and Demand 

Zones The offer and demand zones are widely used tools in cryptocurrency. One of its advantages over other agencies is that they are pretty straightforward and objective.

These zones are derived from the basic concept of supply and demand but applied to technical analysis.

  • Offer: Increase in selling interest or selling pressure.
  • Demand: Increase in buying a stake or buying pressure.

With these clear concepts, we understand that the supply and demand zones are specific price areas with great interest in buying or selling by traders.

This occurs because there is a consensus in the mentality of traders or investors who consider entry or exit points in areas where the price is more attractive.

Offer Zones 

A bid zone is an area of ​​resistance that acts as a magnet for sellers.

When the price reaches this zone, many traders and investors close their positions, causing the cost of the cryptocurrency to decrease due to excessive supply.

Offer Zones.png

These areas are located in places before an aggressive fall in price, and they can be made up of a single candle or a set of low volatility candles called "base."

To represent this area on the chart, draw a rectangle taking the opening price of the last bullish candle closest to the fall as the lower line. As the upper line of the rectangle, the maximum price was reached before the fall.

Demand Zones

These are areas where purchasing pressure prevails. They act in reverse of the supply zones.

When the price reaches these areas, there is a good chance that the price will rebound due to the high buying pressure.

Demand Zones.png

They are identified because they are located in areas before a significant price rise. They can be made up of a single candle or a group of candles with very little volatility (base).

It is represented by a rectangle. The lower line will be the lowest price most recent to the rise, and the upper pipe will be the opening price of the bearish candle closest to the surge.

Despite their close similarity, supply and demand zones should not be confused with support and resistance.

The latter usually coincide in the same price areas as the supply and demand zones. Still, on other occasions, they do not.

On-chain analysis 

Analysis or also known as blockchain analysis, allows you to analyze cryptocurrencies through all the activities that take place on the blockchain.

Being a public record, it is possible to consult each action that has occurred in a cryptocurrency throughout its history, which allows decisions to be made when investing.

Some examples of on-chain analysis are:

  • Amount of transactions made
  • Number of wallets created
  • Hash rate
  • Amounts blocked in Staking
  • Amounts deposited in Exchanges

The number of transactions made 
Generally, this ratio could indicate high volatility in the price, when after a period of stability the average number of transactions usually rises, it indicates that there are many people buying and selling said token, which can mean many spikes in the price.

The number of wallets created 
This has to do with the number of holders that the cryptocurrency can have.

The term hodler derives from the English word "hold", the reason why it is used in a misspelled way was an article published by GameKyuubi in the BitcoinTalk forum, where he referred to how he did not know when bitcoin was at a peak high or low, he would simply keep them in his portfolio in the hope that the price would increase in the future.

That is why it is estimated that the more hodlers a token has, its price may increase in the long term.

Hash rate 
The higher this indicator is, it means that the network is growing, this shows the confidence that miners have in supporting said token. It should be noted that this can only be seen in those tokens that have proof-of-work as a means of security to create new tokens.

Also, keep in mind that miners are usually large bitcoin holders. So it is important to see if they keep their tokens or get rid of them

Amounts blocked in Staking:

It should be noted that the staking activity itself is "lending the tokens" and blocking them in a wallet where a percentage of profit is expected to be received. 

This can be used in many ways, for example, there are proof-of-stake networks where a certain amount of the token is needed to create a node and several investors join together so that they can reach that amount among themselves, then the rewards are distributed in percentage, but also the exchanges can borrow these cryptocurrencies and they do not necessarily use them to create validating nodes but to carry out transactions and through the commissions the profits are distributed to the stakers, thus allowing to be able to stake any token regardless of its type of blockchain

In this case, said indicator could be the equivalent of the hash rate but oriented to chains that are proof-of-stake, this staking serves as a transaction validator, so the higher the amount of said blocked amount, it can be said that the more likely the token is to increase in value.

Amounts deposited in Exchanges

The amount of the token that exchange wallets keep in their reserves has to do with how many people decide to transfer their cryptocurrencies to exchanges to exchange them or how many people decide to keep their wallets hodling.

That is why if the amount of reserves of a specific token of exchange increases it is an indicator that people are trying to sell or get rid of it.

A couple of websites where you can start to see on-chain metrics:

  • Coinmetrics: provides free data for more than 30 cryptocurrencies, including on-chain metrics and correlations
  • Look into bitcoin: this allows you to view different models of bitcoin market cycles bitcoin and some on-chain metrics.


This introductory article can help you take the first steps in the fundamental, technical and on-chain analysis of cryptocurrencies.

It can also be helpful to begin to familiarize yourself with many of the concepts used in the crypto world, to look for relevant related information, and, ultimately, to be able to differentiate some projects from others so that in the future, you can find cryptocurrencies with potential in the what to invest.

It was also shown that technical analysis could give a cryptocurrency trader insights into what happened in the past and facilitate probabilities of future moves. Any charting platform has a wide variety of technical analysis tools that we can implement to perform our analysis. It is always good to combine technical analysis tools looking for confluences or combine them with other analysis methods, such as fundamental analysis and on-chain analysis.

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Gainium is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial adviser before making financial decisions.