OnChain Analysis: 101 Guide to Get The MARKET EDGE!!
👨🏫What Is On Chain Analysis?👨🏫
In brief, on-chain analysis involves tracking cryptocurrency transactions. This is possible because almost every cryptocurrency blockchain is publicly viewable, meaning you can see money moving between wallets in real time.
💰On Chain For Large Cryptos 💰
For some of the large cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Dogecoin, a few key on-chain metrics can be easily checked using the rich lists on Bitinfocharts. This includes coin distribution, exchange wallets, and multi-sig wallet identifiers.
💸On Chain For Other Cryptos💸
When it comes to analyzing on-chain metrics for smaller altcoins, you should always do your best to find as many different blockchain explorers as you can for the cryptocurrency you’re looking into This is because the “default” blockchain explorers for some cryptocurrencies lack a lot of critical information. Sometimes they don’t really show you anything at all. To me this is a red flag, because if a crypto project is legit, they should have nothing to hide when it comes to supply distribution and which wallet belongs to whom, within reason of course.
🥩On Chain For Proof Of Stake🥩
Staking contracts can and often do camouflage the real distribution of a coin or token. This is because it’s not always easy to figure out which wallets those staked coins or tokens belong to. This can have profound effects on a cryptocurrency’s supply and price, but it also serves as a simple way of seeing what people are doing with their coins or tokens. More staked = not selling any time soon.
💪On Chain For Proof Of Work💪
If you’re wondering what the equivalent of staking percentage is for proof of work cryptocurrencies, the answer is exchange balances. Exchange balances of BTC and ETH have been in the news over the last few months, and this is because of what I mentioned a few moments ago – low exchange balance means higher price volatility. What’s interesting is that even though the crypto market hasn’t been looking all that hot lately, exchange balances of BTC and ETH continue to drop.
⚡Validators, Hash Rate, Nodes⚡
Running a validator requires constant attention, and thousands of dollars of investment into a very volatile coin. If you’re not careful, you could even be slashed and lose some of that crypto. When you see that a proof of stake cryptocurrency is adding dozens of validators every month, this means there are some very wealthy people who believe in the long-term potential of the project. For those unfamiliar, hash rate is basically the amount of computing power connected to a cryptocurrency blockchain. Hash rate has a relatively high correlation with the price of the coin being mined, and this is no coincidence when you consider just how much of a commitment cryptocurrency mining is. Setting up a serious crypto mining operation is often exponentially more expensive than staking and brings with it a whole host of other issues related to infrastructure, namely energy and space
- TIMESTAMPS -
2:09 What Is On Chain Analysis?
3:24 On Chain Analysis For Large Cap Cryptos
4:26 On Chain Analysis For Mid-Small Altcoins
8:02 On Chain Analysis For Proof Of Stake
11:07 On Chain Analysis For Proof Of Work
13:55 Validators, Nodes, Hash Rate
📜 Disclaimer 📜 The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.