What Is Crypto On-Chain Analysis and How Do You Use it?

The vast majority of cryptocurrencies available on the market today use public blockchains to verify and record data. Because of this, the data is available “on-chain” for everyone to see, at any time and from anywhere in the world.

On-chain analysis refers to the method of using information from a blockchain ledger to determine market sentiment. More specifically, it involves looking at transaction data and crypto wallet balances – two things that are useful when trying to decide whether to make an investment or not. After all, if a token isn’t being traded by anyone and a vast majority of its circulating supply is controlled by a handful of large holders, known as whales, then it’s probably not a good idea to invest in it.

Bitcoin (BTC) is the world’s first viable cryptocurrency and the largest by market cap. Because of this, the price movements can often cause a domino effect throughout the rest of the market; meaning if the price of bitcoin rises, so, too, do other crypto assets, and vice versa. Thus, many investors typically keep a close eye on bitcoin’s on-chain activity.
Glassnode offers highly granular metrics for on-chain Bitcoin data, such as the movements of bitcoin whales, open interest in the futures trading market, mining difficulty and realized market cap. Some of the metrics are free to registered users, while others require a subscription.