Part 7: Fundamental Analysis – Trading Cryptocurrencies

Does it make sense to use fundamental analysis for trading cryptocurrencies? Is such an analysis reliable enough? Sure, it is. Otherwise, we wouldn’t spend so much time on it in our series dedicated specifically to this topic. You also may ask what are the specifics of trading cryptocurrencies as well as the risks.

Fundamental analysis has its pros and cons.

Pros: The good news is that cryptocurrencies tend to react to various political and economic news the way you would expect from them: the good news are usually followed by growth, bad news by decline. This makes the environment much more transparent for trading than in the trading of Forex fiat currencies. Another advantage of cryptocurrencies compared with dollar or euro is the lower capitalization (as transfers smaller than billions of euro or dollars are reflected in the price).

Cons: If everything was so simple as described above fundamental analysis would be used by all traders. This, however, is not happening. Why?

The advantage of the traditional Forex trading in this respect is the existence of established periodical news aggregators not enabled by cryptocurrencies. In cryptocurrencies, it is the opposite. There are no established official news aggregators and therefore important news about cryptocurrencies appear unexpectedly. This makes each trader to continuously follow news about every cryptocurrency because each project publishes information at its own discretion.


Thanks to the website of CryptoPanic you can follow news from multiple channels in a single point.

Monitoring news about cryptocurrencies

How to keep up to date on cryptocurrencies? We recommend the combination of two methods. See our practical demonstration below.

Crypto-broker (exchange) info channels

The first option to follow the news about cryptocurrencies is to use various information channels used by cryptocurrency brokers and crypto-exchanges, obviously as long as you trade with them. Their advantage, as opposed to large stock exchanges, is their limited currency portfolio. Using a single information resource will help you get more in-depth and detailed information.

Alternatively, you can make use of social networks such as Facebook or Twitter or some less common communication tools such as Telegram or Slack. One shouldn’t ignore RSS websites, blogs, and various discussion forums, either. The official website of each cryptocurrency should always serve as a reliable indicator and, at the same time, a relevant resource of information. Using the mix of all the mentioned resources, you will be up to date about all innovations regarding individual currencies and ready to adequately react.

The dark side of the business is that there is always some bad news heavily impacting the market which you, in the role of a small and uninformed trader, can hardly absorb and exploit in time. For example, after closing down Segwit2x the price plummeted within a few hours by 10%. Unless watching news about cryptocurrencies is your only job it is extremely difficult to keep up and make use of such rapid changes in your trading.

News portals

News portals are a good option primarily for traders using services of large portfolio exchanges i.e. portals such as Coindesk, my favorite CryptoPanic or Cointelegraph, publishing more relevant news. This is exactly the type of news that is useful for traders whose portfolio isn’t defined rigidly and focuses on what is covered in the latest news. The portals are a great choice for traders to select the best currency for trading.

The main shortcoming is the absence of a news portal to provide the traders with all essential news in time. As far as fiat currencies are concerned, this portal exists. Professional services in this field are offered for instance by Reuters.

Combination of broker info channels and news portals

It’s always good to look at both sides when crossing the road. The same applies to listening to the news. To watch both official and unofficial channels pays off. Additionally, it’s smart to be in a picture by not ignoring some of the hearsay news appearing on the websites. A good approach is to define a certain area of cryptocurrencies and to continuously keep up with the latest trends and developments.

Initially, shoot with blank ammunition.

The best proof of each theory is its practical application. However, this practical application might end up in heavy losses of your hard-earned money. To avoid it happening, we recommend you first study all reports in detail and when you go hunting for the first time use blank ammunition, in other words, test your strategy on a demo account.

Trading cryptocurrencies via a demo-account are available with Plus500 or IQ Option. The latter offers to trade of most popular cryptocurrencies (bitcoin, litecoin or ripple) both via demo and real (live) accounts. You can start from as low as USD 10 by sending the amount to your account by card, bank transfer or electronic wallet (e.g. Skrill).

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J. Pro

More about the author: J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn't very successfull with dropshipping on Amazon and other ways of making money online, and I'd only earn a few hundreds of dollars in years. But then binary options caught my attention with it's simplicity. Now I'm glad it did because it really is worth it. More posts by this author

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