One of the most prominent differences is the fact that the company’s growth does not mean the growth of the token. And while creating the framework we are mindful of the differences between crypto-assets and traditional financial assets. We have tried to borrow these aspects to create a framework for analyzing crypto-assets. Some of the most crucial factors are - a macroeconomic environment that may impact the company, barriers to entry, and the management of the company. We are cognizant of the fact that there is much work done on the fundamental analysis in the traditional finance world, and we have tried to modify these models to create the best fundamental analysis for crypto-assets.Įvaluating a company depends on many factors. Even though crypto-assets is an entirely new asset class, the fundamentals of investing do not change. As one of the most successful investors of our time, Warren Buffet says, “price is what you pay, and value is what you get.” We won’t be stretching it if we say that the foundation of Buffett’s wealth creation philosophy is a clear understanding of how price and value differ. The whole concept of fundamental analysis comes from understanding the difference between price and value. And thus, the fundamental analysis gets a lot trickier. However, with crypto assets, there are no expected future cash flows. The expectation of cash flows makes it easier for an analyst to calculate the present value of the future cash flows via various methods. Traditionally, investors expect cash flows attached to assets, for example, dividends with stocks and coupon payments with bonds. It allows us to compare projects of a like to like basis.įundamental analysis aims to arrive at the intrinsic or fair value of a stock, bond, or any other asset. Though fundamental analysis is subjective, there is merit in trying to understand various projects with a broad framework. For different entities, all these forces will have different impacts.
The value is resultant of various macro and microeconomic forces.
A plethora of factors affects a company’s value.
“Beauty lies in the eyes of the beholder” is one of the most famous sayings among the fundamental analysts of financial markets.
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