Onchain Analysis.

Do you ever feel left out on trades probably feeling you are too early or too late in exiting a crypto trade ? The answer is Onchain analysis. Onchain analysis has emerged as a critical tool for understanding blockchain behavior and identifying potential security concerns.?

As blockchain adoption continues to soar, the importance of onchain analysis cannot be overstated, making it a vital topic for blockchain enthusiasts, investors, and researchers alike.In this article, we will discuss the various types of onchain analysis techniques and their applications.

Onchain analysis is the process of analyzing transactions and other activities on a blockchain in order to understand and potentially predict the behavior of the network or its participants. It involves using various tools and techniques to analyze data stored on the blockchain, such as transaction histories, network statistics, and other publicly available information.

It is often used by researchers, investors, and other stakeholders to gain a better understanding of how a particular blockchain or cryptocurrency is being used and to make informed decisions about their involvement with it. On-chain data, paired with both fundamental analysis and technical analysis? may help crypto traders make valuable decisions.?

Using Onchain analysis, traders can follow the smart? money? or “Crypto Whale movements”.This helps to know if the whales are buying,selling or holding their crypto. If the whales are taking their crypto off of exchanges it indicates they will be storing and “hodling”,while if there is massive inflow of crypto into exchanges by the whales, this is an indication that they want to sell their holdings.

Some whales don’t like exchanges. The large amount of crypto they’re looking to buy or sell could stir up the market.They often do Over the Counter Trading (OTC). This allows big investors to buy or sell large amounts of cryptocurrency directly from an exchange or crypto custodian at a fixed price.

The number of active network addresses is one of the metrics that can be used to gauge the health of? a blockchain network., the total wallets with a certain amount of crypto held, the amount of transactions happening on-chain, and the number of wallets with a non-zero balance.

Applications of Onchain Analysis

Market Analysis

Onchain analysis can be used to gain insights into the behavior of market participants. By analyzing transaction data and address activity, we can identify trends in trading volume, monitor the movement of assets between exchanges, and detect potential market manipulation.

Wallet Activity.

Tracking wallet activity shows how many users engage with a particular blockchain. Every transaction on a layer one blockchain requires the native token to purchase block space, and therefore an increasing number of transactions and daily active addresses means more economic activity and a greater demand for the native token. This metric helps drive prices for native layer one tokens much higher.

Liquidity.

Onchain analysis helps identify where all the liquidity is and in the pool it is in. Using Onchain analysis, investors can identify large liquidity pools ranked by total volume locked showing a clear trend, and readers quickly notice the prevalence of stablecoins, ultimately hinting at a risk-off sentiment in the market.

Risk Management

Onchain analysis can help identify potential risks on the network. By monitoring address activity and network behavior, we can identify suspicious or fraudulent behavior, detect potential security concerns, and monitor the flow of funds.

Network Optimization

Onchain analysis can be used to optimize network performance. By monitoring transaction volume, identifying peak usage times, and detecting potential congestion, we can optimize the network's performance and improve the user experience.

Fraud Detection

Onchain analysis can be used to detect fraudulent activity on the network. By monitoring address activity and transaction behavior, we can identify potential fraudulent activity and take appropriate action to prevent losses.

Types of Onchain Analysis Techniques

Transaction Analysis

Transaction analysis is one of the most common onchain analysis techniques. It involves examining the transactions recorded on the blockchain to understand the movement of assets between addresses. By analyzing transaction data, we can gain insights into the behavior of network participants, such as the volume and frequency of transactions, the types of assets being transferred, and the location of transactions. Transaction analysis is often used to identify trends, detect anomalies, and monitor the flow of funds.

Address Analysis.

Address analysis involves analyzing the addresses that hold assets on the blockchain. By examining the public addresses associated with specific transactions, we can gain insights into the identity of network participants, the volume of assets held, and the frequency of transactions. Address analysis is commonly used to identify the largest holders of assets on the network, understand the behavior of specific users, and detect fraudulent or suspicious activity.

Network Analysis.

Network analysis involves examining the connections between addresses on the blockchain. By mapping the relationships between addresses, we can identify patterns of behavior and understand the structure of the network. Network analysis is often used to identify clusters of users and determine the flow of assets between different groups of participants.

Time Analysis.

Time analysis involves analyzing the timing of transactions on the blockchain. By examining the time stamps associated with transactions, we can gain insights into the frequency and patterns of activity on the network. Time analysis is often used to identify peak usage times, monitor network congestion, and identify potential security concerns.

Popular On Chain Analysis tools.

Dune Analytics.

Dune Analytics is a popular blockchain data analysis platform that enables users to explore, visualize, and analyze data from a variety of different blockchains including Ethereum, Binance Smart Chain, and Polygon, among others. The platform provides a user-friendly interface that allows users to query blockchain data using SQL.

Dune Analytics has an extensive library of pre-built queries and dashboards, which cover a wide range of blockchain data, including transaction volumes, smart contract interactions, and user activity. These pre-built queries can be easily customized and shared, making it easy for users to collaborate and share insights with others.

Dune Analytics also offers a variety of powerful tools for data visualization and analysis, including charts, graphs, and interactive data tables. These tools allow users to gain deeper insights into blockchain data, identify trends, and monitor network activity.

Glassnode.

Glassnode is one of the premium on-chain analytics and intelligence platforms for blockchain networks. It provides a suite of data-driven tools and insights that help blockchain developers, researchers, and investors make informed decisions based on real-time and historical blockchain data.

Glassnode collects and analyzes data from a wide range of blockchains, including Bitcoin, Ethereum, and several others. The platform provides a variety of data metrics and indicators, including network activity, mining metrics, on-chain transactions, and asset flows. These metrics can be used to identify trends, monitor network health, and detect potential issues, such as congestion or security concerns.

Glassnode also has an extensive library of charts and dashboards, which allow users to easily visualize and analyze blockchain data. These tools enable users to monitor the state of the network, track user behavior, and identify potential risks or opportunities.

Another key feature of Glassnode is its custom metrics and alerts, which allow users to create personalized metrics and alerts based on specific criteria. This feature is particularly useful for developers and researchers who need to monitor specific aspects of the blockchain network, such as the performance of a particular smart contract or the activity of a specific address.

MessariCrypto.

Messari Crypto is one of the premium? on-chain analytics and intelligence tools that provides comprehensive and reliable data on the cryptocurrency market that has both free and premium packages. The platform aggregates and curates data from a wide range of sources, including blockchain networks, exchanges, and social media platforms, to deliver accurate and up-to-date information to its users.

The platform provides a wide range of metrics, including market capitalization, trading volumes, and price charts, for thousands of cryptocurrencies. These metrics are updated in real-time, providing users with timely and accurate insights into market trends and price movements.

In addition to market data, Messari Crypto also provides a range of on-chain analytics tools that allow users to analyze blockchain data and monitor network activity. These tools enable users to track transaction volumes, monitor the health of the network, and identify potential risks or opportunities.

Messari Crypto also offers a variety of research reports and market insights, which are created by its team of experienced analysts and researchers. These reports provide in-depth analysis and commentary on a variety of topics, including market trends, regulatory developments, and technological advancements.

NansenAi.

NansenAi is a blockchain intelligence platform that provides a range of tools and insights for blockchain developers, investors, and researchers. The platform specializes in Ethereum on-chain data analysis and provides unique insights into network activity, user behavior, and market trends.

NansenAi uses its proprietary clustering algorithm, which identifies and groups related wallet addresses based on transaction activity. This algorithm enables NansenAi to provide unique insights into user behavior, such as identifying the most active wallets, monitoring capital flows, and detecting potential scams or fraud.

NansenAi provides a range of dashboards and visualizations that make it easy to understand and analyze Ethereum data. Its dashboards provide real-time data on key network metrics, such as gas fees, transaction volumes, and mining activity. Additionally, its visualizations make it easy to track capital flows, monitor the performance of specific smart contracts, and identify trends in user behavior.

NansenAi also has a database of token holders and market participants. The platform provides detailed information on the ownership of tokens, including the largest holders, the frequency of their transactions, and their portfolio composition. This data is essential for investors looking to track market trends and make informed investment decisions.

Conclusion.

Onchain analysis is a critical tool for blockchain researchers and traders. By analyzing the data stored on the blockchain, we can gain insights into the behavior of network participants, identify potential risks, optimize network performance, and detect fraudulent activity. I believe all crypto traders should know about this amazing technology in order to maximize their profits.