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What Is On-Chain Analysis? Why Do We Need to Analyze the On-Chain Crypto Data?

An on-chain analysis is the evaluation of the market trends, transaction patterns, network health, and movement of digital assets by the professional stakeholder which can assist the other in making the right decisions.

Jay Hicks



on-chain analysis

On-Chain Data Analysis: An Overview

With the increasing demand of the crypto industry, one tends to know about the basics of the crypto data. One should be aware of the transaction patterns, ongoing trends and fundamental concepts of crypto regulation.  

Unlike the working of the traditional banking system, crypto regulation is based on blockchain technology which is easily auditable and transparent.  Due to being a transparent network, blockchain technology is considered to be the goldmine of information which gives insight into the transaction patterns, underlying trends and crypto movement.

There are plenty of platforms in the market which extract, visualize and analyze the on-chain data to make it convenient for crypto users to be well-informed about the crypto regulation.

Why Do We Need to Analyze On-Chain Data?

The expanding crypto community has to rely, interact and work on blockchain technology. The on-chain data gives deep insight into the crypto transaction patterns, tokenomics, network health, ongoing trends and the behaviour of the decentralized ecosystem. This would help the crypto user to make the right decision.

why do we need to do onchain analysis

An on-chain analysis is the evaluation of the market trends, transaction patterns, network health, and movement of digital assets by the professional stakeholder which can assist the other in making the right decisions. There are certain reasons due which we need to analyze the on-chain data;

Fundamental Analysis

In order to assess the potential and intrinsic value of any cryptocurrency or crypto projects, it is important to do a complete analysis. One should go through the decentralization metrics, trading volume, market supply and token holder counts.

Risk Management

One should have a complete idea about the liquidity patterns of the crypto assets of projects, potential vulnerabilities and the transaction behaviour. This would assist in making the right decision about the crypto ecosystem by being on the safe and secure side.


An on-chain data analysis ensures the verification and authentication of the transaction and makes sure that the transaction patterns are transparent and traceable. Moreover, on-chain data analysis allows the users in comprehensive and accurate audits.

Trend Analysis

By analyzing the blockchain activity, we can predict future behaviours and make smart choices that match the changing blockchain world

How Can We Analyze Blockchain Data?

By now, we can understand how important it is to analyze the on-chain data to have a clear understanding to make the right crypto decisions. Now the question arises of how one can efficiently analyse the on-chain data. Here are a few of the important things to check to analyze the on-chain data;

how to do onchain analysis

Total-Value Locked

Measure the total value of the digital assets locked or accumulated in the Blockchain’s smart contract. It is regarded as the proxy for the activity and user demand. And the price value of the digital asset is directly dependent on TVL trends.

Also Read: What is Blockchain Technology? A Step-by-Step Guide

Token Holder Counts

Having an idea about the count of any token crypto wallets would make it easier for crypto users to navigate the crypto investment.  We can see the how the number of holding digital assets is affected by the market events and conditions. I

Active Addresses

Active addresses depict the total number of active users on the network. Fluctuations in transaction size and holdings per address show changes in users. Blockchain activity rises in bull markets and falls in bear markets and comparing active addresses between chains is a good idea to analyze the on-chain data of any digital asset. Many blockchain explorers like BscScan (BNB Smart Chain), SolScan (Solana), and EtherScan (Ethereum) track active addresses

Transaction Volume

More than a dozen primary and secondary (layer 2) blockchains are working simultaneously in the market. Many of them are competing to be the fastest blockchain with the most transactions. Some measure chains by their transaction capacity, while others use transaction volume to manage congestion, detect odd behaviour, and minimize gas fees.

Concluding Remarks

The expanding crypto community heavily relies on blockchain technology, which has transparent transaction patterns and network behaviour. On-chain analysis is essential for evaluating market trends, network health, and asset movements to aid decision-making. Reasons to analyze on-chain data include fundamental analysis, and assessing a cryptocurrency’s potential value through metrics like decentralization and token supply. Crypto users are advised to must do on-chain analysis to make right investment decisions.

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