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How to Use Fundamental Analysis in Futures Trading: 5 Key Indicators to Build a Profitable Strategy
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Futures trading differs significantly from Spot trading in that it offers high leverage, high risk, and high potential returns, making it a popular choice among experienced traders. However, the higher barrier to entry and greater risk of loss mean that many participants do not turn a profit. To navigate this landscape effectively, it's essential to thoroughly understand the underlying asset and apply fundamental analysis to minimize downside risk and enhance profit potential.
In the cryptocurrency market, the high leverage and volatility of Futures trading continue to attract a large number of investors. However, high returns often come with high risks. Relying solely on technical signals—such as candlestick patterns or moving averages—often falls short of achieving consistent profitability. To have a real shot at improving one’s win rate, understanding the fundamentals of the underlying asset is critical.
This article explores five key indicators of fundamental analysis and how to incorporate them into your Futures trading strategy, providing a foundation for long-term, informed decision-making.
1. What Is Fundamental Analysis in Futures Trading
Fundamental analysis in the context of Futures trading refers to evaluating the intrinsic value and growth potential of a crypto asset by examining core project data and on-chain indicators. This type of analysis helps traders make informed decisions about when to open positions. Common elements include on-chain metrics and token-related data.
Unlike technical analysis, which focuses on short-term price movements, fundamental analysis is centered on long-term value and sustainability. It is especially useful for building and managing mid-to-long-term positions. By identifying undervalued or overvalued assets through fundamental analysis, traders can better time long or short entries and enhance the overall effectiveness of their strategy.
2. Why Conduct Fundamental Analysis in Futures Trading
2.1 Addressing the Lag in Technical Analysis
Many Futures traders rely heavily on technical analysis—such as candlestick patterns and volume-price relationships—to determine whether a trading opportunity exists. While technical tools are widely used, they are not foolproof and can often produce misleading signals. Fundamentally, technical analysis is derived from historical price behavior and identifies recurring patterns or trends with a high probability of repetition. However, this makes it inherently lagging—traders often only react after a trend has already formed.
2.2 Enhancing Certainty in Market Direction
Technical analysis has its limitations and may not always provide reliable signals. Fundamental analysis helps address these shortcomings by offering a more comprehensive, long-term, and data-driven approach. It incorporates a wide range of market factors, such as on-chain metrics and token-level data, to provide a broader perspective.
2.3 Identifying Long-Term Value Opportunities
It's important to note, however, that strong fundamentals do not always translate into immediate price increases. Likewise, weak fundamentals may not result in a sudden decline. This is because fundamental analysis is best suited for identifying long-term value and trend opportunities. For short-term timing and precise trade entries, it is recommended to use fundamental and technical analysis in combination.
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3. Five Key Indicators to Understand Futures Fundamentals
The following five data points can be used to conduct fundamental analysis in Futures trading:
3.1 Active Addresses
The number of active addresses reflects user activity on a blockchain network and offers insight into user engagement with a given project. A steady increase in active addresses over time indicates a thriving ecosystem. If the token price is relatively low during this period, it may present an opportunity to hold the asset and consider opening long positions. Conversely, a decline in active addresses suggests reduced user activity and may warrant reducing exposure to the asset or opening short positions. Active address data can typically be tracked using blockchain explorers such as Etherscan.
Practical Tips:
- Watch for a steady upward trend
- Combine with price trends to identify potential “value opportunities.”
3.2 Hash Rate
Note: This indicator applies only to Proof-of-Work (PoW) cryptocurrencies, such as Bitcoin, Ethereum (pre-merge), and Bitcoin Cash. In PoW networks, miners validate transactions and secure the network by solving complex mathematical problems using high-performance computing power. The hash rate measures the total computational power being used to process transactions and secure the network.
Generally, the hash rate is positively correlated with the long-term value of a cryptocurrency. A rising hash rate indicates that miners are confident in the project and are willing to commit long-term capital to support its infrastructure—this could signal that the token is undervalued, presenting a potential long opportunity. Conversely, a declining hash rate suggests that miners are pulling back, possibly indicating overvaluation and creating a potential short opportunity.
Hash Rate Rising: Indicates miners are confident and investing resources—bullish signal.
Hash Rate Falling: May indicate declining miner confidence—potential downward price pressure.
Practical Tip: For PoW-based Futures trading, use hash rate trends to anticipate broader market direction.
Bitcoin Hashrate info from Bitinfocharts
3.3 Total Value Locked (TVL)
TVL (Total Value Locked) is a key indicator used to assess the capital-attracting capability of DeFi projects. It refers to the total value of cryptocurrencies deposited or locked within a DeFi platform. A higher TVL indicates that users are confident in the project and are willing to lock their assets on the platform, reflecting its credibility and market recognition. Platforms like DeFiLlama provide real-time TVL data.
TVL Increasing → Rising market confidence; may present a long opportunity
TVL Decreasing → Capital outflows; potential short opportunity
3.4 Market Cap and Fully Diluted Valuation (FDV)
These two metrics together reveal a project’s current valuation and potential future valuation:
- Market Cap = Circulating supply × Current price
- Fully Diluted Valuation (FDV) = Total maximum supply × Current price
If the FDV is significantly higher than the current market cap, it implies that a large number of tokens are yet to be unlocked. Once these tokens enter circulation, they may create sell pressure. This is particularly important when evaluating short opportunities for newly launched tokens.
Example: When Curve launched its CRV token, the trading price reached $15–$20, pushing its FDV over $50 billion—exceeding even Ethereum at the time. Such a valuation was clearly excessive, and the market quickly corrected. In this case, a short position would have been a logical move. Conversely, a low valuation relative to the project’s fundamentals could indicate a long opportunity if the token is undervalued.
3.5 Token Supply
Assuming other fundamentals are comparable, the token supply can have a significant impact on the asset’s price. Key supply metrics include maximum supply and circulating supply, with the latter being particularly important.
In Futures trading, circulating supply serves as the theoretical basis for long-term positioning. Tokens with limited circulating supply and concentrated holdings tend to have higher upward potential, making them more suitable for long positions. On the other hand, tokens with large circulating supply and highly distributed holdings may face resistance in price appreciation, and thus are more favorable for short positions.
4. How to Trade Futures on MEXC
MEXC Futures trading allows users to utilize leverage to speculate on the price direction of cryptocurrencies by going long (buy) or short (sell) based on market trends. Compared to Spot trading, Futures offer the advantage of two-way trading, amplified returns, and greater strategic flexibility.
MEXC provides a comprehensive suite of Futures products, covering major cryptocurrencies and trending new tokens. It supports both USDT-M Perpetual Futures and Coin-M Futures, delivering a robust and stable trading experience. The platform offers low slippage, high liquidity, and real-time execution, along with a full range of professional tools such as TP/SL, trailing stop, Futures PNL statements, and funding rate insights—enabling users to manage risk and analyze performance with precision.
Users can start trading Futures on MEXC in just three simple steps. Using BTC as an example:
1) Log in to the MEXC App or official website
2) Search for “BTC” in the search bar and select the BTC Futures trading pair
3) Choose your order type, enter the quantity and price, and execute the trade
The MEXC Futures interface is fully featured, supporting a variety of order types including limit, market, and stop orders. Traders can also monitor their capital changes at any time through the Futures Statement feature, reviewing the PNL and detailed fee breakdown of each transaction.
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5. Conclusion: Building an Edge with Data-Driven Insight
In the highly volatile and fast-paced Futures market, traders who consistently achieve long-term success are rarely relying on luck—they are driven by data-informed insight. Fundamental analysis serves as a critical tool in building this strategic mindset. By analyzing five core indicators—active addresses, hash rate, TVL, market cap vs. FDV, and token supply—traders can uncover the true forces behind market trends and confidently construct mid-to-long-term strategies.
While price may lie in the short term, fundamentals often do not. By mastering fundamental analysis, you’ll move beyond blindly following the crowd and become a Futures trader with logic, strategy, and long-term vision.
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Disclaimer: The information provided in this material does not constitute advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it serve as a recommendation to purchase, sell, or hold any assets. MEXC Learn offers this information for reference purposes only and does not provide investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. MEXC is not responsible for users' investment decisions.