onchain_analysis
Understanding On-Chain Analysis from Scratch
This article introduces you to on-chain analysis, covering learning paths, practical tools, and key fundamental indicators to help you quickly grasp this unique analytical technique in the crypto space. Through publicly available blockchain data, you will learn how to explore the market, interpret investor behavior, and utilize reliable data as a powerful investment tool to navigate the ever-changing crypto market.
Previous Analysis
From market sentiment, technical trends, and on-chain data analysis—has Bitcoin reached its bottom?
Background Supplement
Technology: Learning EVM-based On-Chain Analysis—Example of $COCORO
The Value of On-Chain Analysis
The cryptocurrency market fundamentally differs from traditional financial markets. Cryptocurrency issuance and trading are based on blockchain technology, where all token transfers between on-chain addresses are publicly and transparently recorded. Although we cannot directly identify the owners behind these addresses, on-chain analysis does not focus on individuals but rather on market consensus and behavior as a whole. By aggregating and analyzing the flow of funds in the market, we can infer trends and market dynamics based on data.
Learning On-Chain Analysis: A Starting Point for Beginners
For new investors, technical analysis is often the first domain they encounter. However, the variety of technical analysis schools and high learning barriers can be daunting. In contrast, on-chain analysis serves as a more beginner-friendly starting point. Its data observation level is broader, typically starting from daily charts, making it suitable for investors who cannot monitor the market continuously. This characteristic not only reduces the need for frequent trading but also aligns well with beginner investors who follow the “observe more, trade less” approach and working professionals who lack the time for frequent transactions.
So, how can you develop your own on-chain analysis strategy? First, select a few core indicators and thoroughly understand the formulas behind them. Recognizing the calculation principles will help you grasp the meaning and timing of each indicator’s application. The second step is filtering indicators—there are countless on-chain data metrics, and many indicators are highly correlated. If correlation is too high, they are likely influenced by the same market factors, narrowing our market observation scope and potentially distorting overall decision-making due to a few specific market drivers. Therefore, selecting complementary indicators is crucial for capturing market dynamics more comprehensively. Below, we introduce some accessible on-chain data sources that are ideal for beginners to gradually familiarize themselves with the field.
On-Chain Analysis Tools
On-chain analysis tools can be broadly categorized into two types: blockchain explorers and chart analysis websites. Blockchain explorers are fundamental tools used to directly query and browse raw blockchain data, such as transaction records, address balances, and block information. Chart analysis websites, on the other hand, are more advanced, extracting key indicators from blockchain data and presenting them in graphical formats to help users analyze market trends, investor behavior, and fund flows.
Blockchain Explorers:
- Etherscan (Ethereum Network)
- Blockchain.com (Bitcoin Network)
Chart Analysis Websites:
- Glassnode: Offers the most comprehensive and professional indicators, though many charts require payment.
- CryptoQuant: Provides extensive on-chain and market data analysis, covering exchange liquidity and other metrics.
- Dune Analytics: Allows users to create custom SQL queries and generate personalized charts.
On-Chain Indicators
Transaction Volume: Tracking the Scale of Fund Flows
The total value of all transactions recorded on a blockchain network within a specific time period (measured in USD or BTC). This indicator reflects the scale of fund movements within the network but does not include internal order matching within exchanges (on-chain data only).