Introduction: Why should you monitor data on the chain?
In the world of cryptocurrencies, the “whales” (large investors) control the market movement, but what if you could see their moves before they happen? This is where On-Chain Analysis comes in, giving you an inside look at what’s going on behind the scenes in the blockchain network.
In this article, we'll show you how to extract hidden market signals, analyze whale moves, and anticipate trends before they become apparent to everyone.
What is On-Chain Analysis? And Why is it Important?
On-Chain analysis is the study of data stored on the blockchain, such as the number of transactions, money flows between wallets, whale movement, and other indicators that help understand market sentiment and trends.
The importance of On-Chain analysis
It gives you insights not available in traditional technical analysis.
Helps you discover aggregation and distribution operations.
Allows you to follow whale activity and predict big moves.
Top On-Chain Indicators to Watch
1. Whale Wallet Activity
Whales are the major players in the cryptocurrency market. Following their movements can give you strong signals about the upcoming trend.
How do you track whale movements?
Use tools like Whale Alert or Glassnode to monitor large conversions.
Monitor currency flows to trading platforms: if the deposits to the platforms increase, it may be a signal of an upcoming sell.
Notice the withdrawals to cold wallets: a sign of intention to hold and increase the price in the future.
Practical example:
In May 2021, analysts noticed a spike in massive BTC withdrawals from exchanges to cold wallets, which was an early indicator of a strong bull run to come.
2. Exchange Reserves
The fewer coins on the trading platforms, the greater the likelihood of a price increase, and vice versa.
How do you interpret this data?
Declining coin balances on exchanges = investors withdrawing their funds to storage, indicating low supply and increased demand.
Higher coin balances on platforms = potential for increased selling and downward pressure on prices.
Practical example:
In March 2022, investors noticed a sharp drop in Ethereum balances on exchanges, giving an early indication of a 40% bull run over the following weeks.
3. مؤشر MVRV (Market Value to Realized Value)
It measures how much the value of a currency has risen or fallen compared to its actual purchase price.
How to use it?
MVRV is high (>3) = Market is overbought, correction may occur.
Low MVRV (<1) = The currency is undervalued, and may be a good buying opportunity.
Practical example:
In December 2018, when Bitcoin's MVRV was below 1, investors took it as a strong buy signal, which later led to a two-year bull run.
How to anticipate the market using On-Chain analysis?
Monitor the activity of whales and big investors: Don't enter the market randomly, follow the movements of the big players.
Use historical data to predict trends: How did the market react in the past under the same conditions?
Combine On-Chain Analysis with Technical Analysis: To get a fuller picture before making your decisions.
On-Chain Analysis Tools You Should Be Using
Glassnode – for analyzing on-chain financial flows.
CryptoQuant – to track currency flows on trading platforms.
Whale Alert – to monitor the movements of large whales.
Conclusion: Use data before everyone else
In the cryptocurrency market, intelligence is your most powerful weapon. With On-Chain Analysis, you can read what’s happening beneath the surface and make decisions based on solid data, before the market moves suddenly.
Start tracking these indicators today and stay ahead of the whales in your investment decisions!