In the world of cryptocurrencies, each of them uses a blockchain, either its own or “borrowed,” be it Bitcoin, Ethereum, or any other.
To make this article easier to understand, let’s use the example of Bitcoin, which has its own blockchain network, just like Ethereum. But remember: all cryptocurrencies have network data and are hosted on some blockchain.
The Bitcoin network blockchain, following our example, is an open ledger, which allows an observer to analyze every transaction made and estimate the amount of coins that are stored or have been moved by any address on the network.
To track these transactions, you only need to know which addresses are involved in the exchange. The transparency of the blockchain allows these addresses to be tracked and activity data to be aggregated, creating metrics that reveal valuable market insights. All market participants can obtain data from the network to analyze Bitcoin in depth, unlike traditional market assets.
Network Data
Therefore, it is important to track the on-chain activity of bitcoin exchange addresses,
for example, how many bitcoins are in any given wallet at any given time, as well as the amount of BTC entering or leaving exchange addresses.
