Today I'm going to make my Steemit Crypto Academy Homework task by professor @imagen that talking about Introduction to the Principles of Crypto Analysis. Very interesting lessons. Actually I have very little knowledge about this, but I will try to discuss it to improve my writing skills. On this occasion I will try to discuss it.

What are the differences between Fundamental Analysis and Technical Analysis? Which one is used most often?

Fundamental Analysis

Fundamental analysis is a method and analysis carried out by traders by observing all information and data related to crypto assets. In this case, traders can collect several factors that influence the price of crypto assets inside and outside the project ecosystem. This analysis aims to determine undervalued or overvalued crypto assets so as to provide an indication for traders to make the right decisions. The results of the analysis can be used as a reference to determine the next steps that will be taken by traders in which crypto assets will be invested or or distributed.

In the world of cryptocurrencies, price volatility and trend changes are bound to occur in the crypto market. When the price of crypto assets shows undervalued, here traders can invest and hold crypto assets for a certain period of time to get profit from analysis results that show potential for future development and growth. When the price of crypto assets shows overvalued, here traders can distribute and sell crypto assets to secure profits from the analysis results that show significant progress and growth that has occurred. Fundamental analysis can be applied to run a profitable trading strategy.

Fundamental Analysis requires traders to get all the information and data to provide accurate analysis results. This includes everything related to the project such as goals, founders, developers, roadmap, technology, vision, mission, quality, functionality, characteristics, future projects and all things contained in the project white paper. Financial Metrics can also be collected by recording the market cap, liquidity, supply, circulation and ranking of the crypto asset in the market. Onchain Metrics will also strengthen analytical data such as blocks, transfers, holders, validators, staking and total issuance related to the blockchain.

Technical Analysis

Technical analysis is a method and analysis carried out by traders by observing the trading charts of crypto assets that show everything that is happening in the market. In this case, the trader can predict the price of the crypto assets based on price movements and trend changes over a certain period of time. This analysis aims to determine the right time to enter and exit the market so that it can bring profits and minimize losses from the trades made. The results of the analysis can be used as a reference to determine the next steps that will be taken by traders to place buy orders or sell orders.

In the world of cryptocurrencies, price volatility and trend changes are bound to happen in the crypto market. When the price movement of crypto assets increases, here traders can place buy orders at the beginning of a downtrend reversal to an uptrend to maximize profits from analysis results that predict crypto asset prices will continue to rise. When the price movement of crypto assets decreases, here traders can place a sell order at the beginning of the reversal of the uptrend to a downtrend to minimize losses from the results of the analysis that predicts the price of the crypto asset that will continue to fall. Technical analysis can be applied to execute profitable trading strategies.

Technical analysis allows traders to make price predictions of crypto assets based on everything that has happened in the market on trading charts to provide accurate analytical results. To support technical analysis, traders can use indicators that can be added to crypto asset charts to provide various indications and assist trading strategies. Some of the factors that must be analyzed are price movements, trend changes, market structure, bullish and bearish phases, timeframes, indicators and charts. Technical analysis is analysis that most used by traders to make successful trades. This is because technical analysis provides accurate results and is directly related to the process of trading crypto assets.

Fundamental Analysis indicating the objective of the Project, Financial Metrics, and On-Chain Metrics of Polkadot (DOT)

_{Source Polkadot}

Polkadot is a platform that is present in the world of cryptocurrencies that has a special advantage in the blockchain ecosystem. Polkadot aims to provide a multi-chain that can communicate between external blockchains. This is very useful and beneficial for many people who have been in the blockchain ecosystem and the cryptocurrency world. The goal of this project is to expand the reach of new users and the cryptocurrency market by providing multiple platforms or blokchain in the DeFi world that every user can use to carry out the transactions.

Polkadot is considered able to compete with Ethereum with the advantages it has. The main factor that makes it better than Ethreum is due to its higher scalability and good interoperability. High scalability makes transactions that occur in the Polkadot system run very quickly. The existence of interoperability allows communication between blockchains can occur. This is very useful and beneficial for users because they can make transactions quickly and perform transactions between blockchains.

_{Source Polkadot}

Based on the image above, Polkadot is a platform that has very good quality in the cryptocurrency world. Polkadot has interoperability which allows users to make transactions cross blockchain. Polkadot has a economic & transactional scalability that allows validators to work on multiple blockchains. Polkadot is a blockchain innovation that is easy for every user to use. Polkadot can upgrade any system easily and adapt quickly. Polkadot has a good level of security even though users can make transactions between blockchains. Polkadot offers users to manage network governance where all stakeholders have a voting rights.

_{Source Polkadot}

Polkadot was founded by 3 people who have a lot of experience in the cryptocurrency world namely Dr. Gavin Wood, Robert Harbermeier and Peter Czaban in 2016. Dr. Gavin Wood is the co-founder and CTO of the Ethereum blockchain who discovered the fundamental components of the blockchain industry such as solidity, proof of authority consensus, and Whisper. Robert Habermeier is a former member of the Rust community who has a experience in areas such as blockchain research and development, distributed systems and cryptography. Peter Czaban is the technology director of the Web3 Foundation who has a experience in areas such as financial data, machine learning and business development.

_{Source CoinMarketCap}

Based on the chart and data above, Financial Metrics of Polkadot (DOT) can be analyzed and identified. DOT has good fundamental analysis. DOT is ranked 8th on the crypto market list. The price of the DOT is $45.45. Market cap is $44.884.291.404. Volume is $2.480.134.747. Circulating supply is 987.579.314.96 DOT. The DOT price chart shows significant growth and development since its launch until now. This shows that DOT has good potential to be used as investment assets and traded in the market.

_{Source Polkadot}

Based on the picture above, On-Chain Metrics of Polkadot (DOT) can be analyzed and identified. Finalized Bloks is 7.368.467. Signed Extrinsics is 5.626.743. Transfers is 4.152.183. Holders is 949.570. The total issue is 1.123B. Staked Value is 709.583M or 63.1%. Validators are 297/297. Inflation Rate is 8.24%. Circulating is 245.998M. This shows that the Polkadot blockchain has very good quality in the blockchain ecosystem.

Make a purchase from your verified account of at least 10 USD of the currency selected in the previous point

• Here I will make a purchase Polkadot (DOT) on Bittrex.

• Here I select the Market feature. I fill in DOT on the search field. I choose the DOT/USDT.
  
  

  _{Source Bittrex}

• Here the DOT chart, buy and sell options display will appear. I choose the Buy option.
  
  

  _{Source Bittrex}

• Here I choose the Market order. I filled in the amount of 10 USDT. I click place buy order DOT.
  
  

  _{Source Bittrex}

• Here order history and all the details of transactions is available.
  
  

  _{Source Bittrex}

Apply Fibonacci retracements to the previously selected asset with a 4-hour time frame on the platform of your choice. Observe the evolution of the price at 24 and 48 hours, did it go up or down in value? Look to identify resistance and support levels

Fibonacci retracements are tools that traders can add to crypto asset charts for technical analysis. Fibonacci retracements function to identify support and resistance levels of the observed price movement within a certain timeframe. The values ​​plotted on the chart show the points for traders that can be used as a reference in carrying out trading strategies.

Fibonacci retracements can be used to determine support and resistance levels based on trends in the market. In an uptrend, the lowest point represents a value of 1 or 100% and the highest point indicates a value of 0 or 0%. On the other hand, in a downtrend, the lowest point indicates a value of 0 or 0% and the highest point indicates a value of 1 or 100%. Traders can place buy or sell orders at a price range between two specific Fibonacci retracements values according to a profitable trading strategy.

_{Source Tradingview}

Based on the chart above, I use Fibonacci retracements in analyzing the DOT/USDT chart with a 4 hour time frame on October 19, 2021 at 16:00. In a 24-hour analysis until 20 october 2021 at 16.00, the price movement of DOT/USDT shows an increase and currently an uptrend. The support level is identified at $40.08 and the resistance level is identified at $45.21.

_{Source Tradingview}

Based on the chart above, In a 48-hour analysis until 21 october 2021 at 16.00, the price movement of DOT/USDT shows a decrease and currently an downtrend. In this case, the Fibonacci retracement can create a new support level based on the value of 0.5 or 50% because it represents the midpoint of the analyzed crypto asset price. The new support level is identified at $42.63 and the resistance level is identified at $45.21.

What are Bollinger Bands? How do they apply to Crypto Technical Analysis? With which other tool or indicator do you combine Bollinger Bands to analyze a Crypto?

Bollinger Bands is an indicator that traders use in conducting technical analysis on crypto asset trading charts. This indicator serves to indicate the price volatility that occurs in the market. This indicator is in the form of 3 lines on the chart where the upper line is called the upper band and the lower line is called the lower band and the middle line is called the middle band. Price movements followed by this 3 bands indicate a volatile price by giving indications of price resistance above, price safe in the middle, and price support below.

Bollinger Bands serve to provide an indication of the trend and price movements of crypto assets in the market. This indicator provide an indication of the strength of the trend showing a widening of the band and a shrinking of the band. The widening of the band indicates that the trend is strong, either uptrend or downtrend and the price movement is very significant. The shrinking of the band indicates the trend is sideway and the price movement is not significant.

_{Source Tradingview}

Based on the chart above, DOT/USDT is in an uptrend in the market. The Bollinger Band shows a widening of the band which indicates the price has increased significantly based on the bullish candle that forms on the chart. Furthermore, Bollinger Bands show a shrinking band which shows the price has not changed significantly based on several candles that form on the chart. The 3 lines which are the upper band, middle band and lower band formed on the chart provide an indication of the resistance level above, the safe level in the middle, and the support level below.

Bollinger Bands can be combined with ADX indicator in performing technical analysis on crypto asset trading charts. ADX is an indicator that shows the strength of the trend that is forming in the market where the trend shows an uptrend or downtrend. The ADX line is plotted on the chart with values 0 to 100. The value 25 indicates the boundary between a non-trending and trending market. The value of 25 - 100 indicates the market has entered a trend.

_{Source Tradingview}

Based on the chart above, when the DOT/USDT market trend is sideway, ADX line shows a value below 25 which indicates a weak trend. Furthermore, when the DOT/USDT market trend is uptrend, ADX line shows a value above 25 which indicates a strong trend. Bollinger Bands and ADX can be combined to obtain more accurate technical analysis results so that traders can determine when to enter and exit the market by placing buy or sell orders that bring profit and minimize losses.

Conclusion

In the world of cryptocurrencies, fundamental and technical analysis are important factors that every trader should do before investing and trading. This is very useful and helps traders to determine the right crypto assets to invest in and trade in the market. Every trader hopes to be able to maximize profits and minimize losses. To carry out a trading strategy, traders can rely on many indicators to provide accurate analysis results and can be used as a reference. In this case, cryptocurrency analysis plays a very important role in making successful trades.