In this article, we look at on-chain analytics and how it can improve cryptocurrency trading and investing.
On-chain analytics (also known as blockchain analytics) involves analyzing elements of a cryptocurrency with the goal of improving investment and trading decisions.
Additionally, on-chain data is information about all transactions that occurred on the network. In the case of public blockchains such as Bitcoin and Ethereum, anyone can access these transactions.
Appropriate use of on-chain metrics can make blockchain transaction data more applicable to cryptocurrency market intelligence. This means, for example, combining indicators with technical and fundamental analysis to obtain better information. There may also be cases where whale movements are monitored and tracked.
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Format of on-chain data
In particular, on-chain data can take three forms:
- Raw on-chain data: These generally include some of the simplest indicators that can be useful in determining the level of development of a network. This includes the number of transactions on the chain, transaction volume on the chain, and number of active addresses. Additionally, the number of wallets with non-zero balances and the total number of wallets holding a certain amount of tokens. Additionally, this form of data can be accessed through a simple block explorer. This data is very useful and a great starting point.
- aggregated data: This is an aggregated on-chain metric. These data also provide more insight into the actual state of the network. There are quite a few platforms that offer insightful dashboards and charts. The main advantage of this type is that it helps users visualize blockchain data. Platforms that specifically offer these services include Nansen, Dune, and Messari.
- Entity data: This type involves using data to link a set of wallets to institutions and individuals. Therefore, this type allows users to know whether a particular institution or individual is holding, selling or buying. This means that it can be used to track the activities of cryptocurrency whales or major players in the cryptocurrency space.
How to get on-chain data
The best way to obtain on-chain cryptocurrency data is to search for it yourself. However, this requires running Node.
Another way to obtain on-chain data is through analytics websites. There are several cryptocurrency data platforms, many of which leverage machine learning to gain better insights. Some of these platforms are:
- Glassnode We provide simple on-chain metrics for free. You can also access advanced metrics and high-frequency time series data for a specific fee.
- Coin Metrics It provides free data for about 37 cryptocurrencies. This includes on-chain metrics and correlations.
- Into the Block It is also a platform that provides various analysis tools. Covers sentiment analysis, order book data, and on-chain analysis for multiple cryptocurrency assets.
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