The public nature of blockchains is constantly generating an endless current data as each transaction and address leave a clear track. This information, known as Unconut Data, provides a way to exactly analyze cryptocurrency network activity.
Some indicators on the chain, such as the number of active addresses, Hodl wave and Hashrate, have become known in the industry, but the general public is just scratching its surface.
Since the number of available up -chain statistics has grown into an overwhelming amount, the inventive that is most useful to the average investor has also become a task. A good place to start is with average exchange deposits, Bitcoin “sent from” addresses and miners to indicators.
Average exchange deposits
There is usually some confusion in analyzing an exchange’s inflow and outflow. Buyers do not need to withdraw funds after buying cryptocurrencies, and the same can be said about inflows, as funds can pass some time before any trade takes place.
Average Bitcoin exchange deposits. Source: cq.live
A better way to quantify such flow is by measuring the average size of the deposits. As shown in the above chart, each peak size in average deposits coincides with a local Bitcoin price. This movement can be a trace of a large crypto whale that capitulates and cuts losses.
Such an indicator applies especially during a long-term trend. As mentioned before, indicators on the chain should not be analyzed in total isolation. Capitulation can only occur after a few months when the price does not show power.
Bitcoin ‘sent from’ addresses
Instead of measuring the active number of addresses, give the 7-day average of the ‘sent’ addresses of metric clearer insight into network activity. This dramatically reduces the noise from exchange withdrawals and double counting of mixing services.
Bitcoin Daily Active Origin addresses. Source: BitinfoCharts
Note how each important peak on average coincides daily from addresses with the local Bitcoin price short-term top. Those sudden nails in containers moving coins indicate short -term discomfort, although this is not necessarily an indication of a change in the market’s trend.
Again, this indicator should not be interpreted without recognizing the market trends. Such a case occurred during the rally from April to July 2019, as the metric rose twice, which indicated a cool period, although prices continued a few weeks later.
Miners to exchange
Glass node offers another detailed overview of Bitcoin Miners transfers after exchanging. On average, 1,800 BTC per day was exploited before the halver in May and this figure has now been reduced to 900.
Although exchanges are not necessarily the only way for miners to download their position, it is by far the best statistics to determine their short -term price expectations.
Miners BTC transfer to exchanges. Source: Glass node
The above 7-day moving average chart shows that such flow was drastically reduced around the Bitcoin halving and the figure remained at the lowest levels in 12 months.
Meanwhile, Bitcoin remained relatively steady at $ 9,800 and did not surpass the $ 10,000 point. The reduction in the transfer to exchanges can be interpreted as a somewhat clumsy indicator.
This accumulated position by miners who refuse to sell can be a potential catalyst for a more substantial disadvantage if Bitcoin price cannot maintain higher levels. Unlike futures, there are interest, where short sellers are liquidated as the market goes up, not such an effect would happen as the amount of BTC held by miners has increased.
On-chain data helps to dampen investor prejudice
Unconut analysis is not an exact science because trading is inherently a human-driven activity, at least for now.
If confronted with conflicting signals, investors tend to rationalize those who are not in line with their mindset and desires.
As discussed before, there is a lot of noise in the market, but the analysis of data Unconpet can help investors separate the signal from all the distracting noise.
The views and opinions expressed here are exclusively those of the author and do not necessarily reflect the views of Cointelegraph. Each investment and trading movement involves risk. You need to do your own research when making a decision.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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