It is a method for evaluating the value of a financial instrument which includes studying the fundamentals of an asset for measuring its potential returns. These fundamentals include economic and financial factors, macroeconomics such as the state of the economy, business competition, industry state, etc. Upon completion of fundamental analysis, the goal is to identify whether an asset is undervalued or overvalued and make a buying decision on those bases.
In terms of cryptocurrencies, fundamentals may include understanding on-chain metrics and performing data analytics to forecast returns. These metrics could be the number of addresses, volume of transactions, the network hash rate, the value of top holders, etc. However, since cryptocurrencies are relatively a new asset class, it is difficult to perform fundamental analysis and is mainly driven by speculation. As the industry matures, better ways to evaluate cryptocurrencies could emerge.