On-chain analysis is a process where someone (ie a crypto trader) looks at the on-chain data to help them make decisions. On-chain data often contains information about every transaction on a specific public blockchain network.
Information, including transactions, wallet addresses, transfer amounts, and more, is stored on the public ledger. So anyone can use a block explorer to find this information. Users can also use block explorers to review miner fees, smart contract code and more.
The information obtained from an on-chain study allows anyone to determine who owns what and their transaction activity. For example, users can track multiple transactions to track their movements and determine where the payment originally came from. All of this information is recorded on the public ledger for anyone to see.
In terms of trading, on-chain analysis is a method of financial research that is driven by fundamentals rather than technical indicators. Instead of looking for patterns on a chart, traders look at the recorded activity on the public ledger. On-chain analysis focuses only on a specific cryptocurrency asset by examining its transaction activity and historical patterns, all of which can be used to predict the direction the cryptocurrency will go.
Trading data and investment activity can be obtained from the blockchain network and evaluated to help investors create a viable trading strategy. For example, users can create models to help them make trading choices based on historical data. Although history doesn’t always repeat itself, it does rhyme, so being able to see how assets have performed in the past is a good indicator of future strategies. In addition, people can use the collected financial data to create forecasting models that can effectively predict future price movements.
In addition to traditional research methods, including technical analysis (TA), on-chain analysis is gradually becoming more important for any investor serious about trading cryptocurrencies. Therefore, it is beneficial to approach the analysis of crypto-assets from several angles instead of focusing on one approach.
A wide variety of online platforms and tools enable users to collect and analyze on-chain data. For example, block explorers such as EtherScan (for Ethereum) and BscScan (for Binance Chain) provide basic amounts of information regarding transactions on those networks. However, for deeper information gathering, more sophisticated tools are needed.
CryptoQuant, a leading on-chain data platform, has become the official provider of on-chain data for CME Group’s Datamine. This on-demand platform allows traditional financial institutions access to detailed historical data.
As the first and only on-chain data provider of CME Datamine in July 2022, CryptoQuant offers its data via CME Datamine, enabling traditional financial institutions and hedge funds to purchase the data from the CME Group platform. They can now get digital asset data from CryptoQuant via the CME Group Datamine service.
CryptoQuant data is globally recognized as the most reliable source of complex on-chain data for Bitcoin, such as exchange flow, miner flow, long-term holders and many others.
Used by many reputable media such as Forbes, Bloomberg and CNBC, CryptoQuant also worked with Valkyrie Fund to develop an overview of the Bitcoin market, which contributed to Valkyrie’s Bitcoin Futures ETF approval in the US.
Previously, CryptoQuant developed a patented wallet verification technology that served anti-money laundering services in 2019. CryptoQuant partnered with the Korean National Police Agency to track down and arrest the notorious criminals behind the Nth Room scandal. CryptoQuant has grown exponentially since then, being used by retail traders in over 200 countries and over 200 institutional clients.
“Digital asset investment has been seen as dangerous speculation compared to other assets such as stocks, gold or real estate. This bias formed because there was no reliable information in this industry, and investors bought digital assets without a data-based analysis,” said CryptoQuant CEO Ki Young Ju. “CryptoQuant’s main goal is to enable investors to redefine the way of digital asset investment, and to provide fundamentals for digital asset valuation based on the data.”
As more traditional financial institutions expand into digital assets, the importance of reliable on-chain data, delivered by already known tools, will increase more and more. With the partnership with CME Group, CryptoQuant is expected to become a staple of the traditional financial industry and is actively recruiting new employees to meet the institutions’ demands. CryptoQuant is backed by Hashed, Galaxy Interactive and other major ecosystem investors.
Closure
If you decide to use blockchain-based assets such as cryptocurrency for your financial transactions, that data will be stored permanently and cannot be changed. Everyone has access to some of the data stored in a blockchain, including the results of any on-chain analysis performed on that data. However, it is worth noting that on-chain data can be useful for formulating future trading strategies.
Only the most savvy traders and investors recognize the importance of the data recorded on the blockchain when determining how best to approach cryptocurrency transactions.
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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