What is On-Chain Analysis?
On-chain analysis is the process of studying the data that exists on a blockchain to understand the behavior of a cryptocurrency, its users, and the market trends.
Unlike traditional trading, which relies on prices from exchanges, on-chain analysis looks at the blockchain itself — all transactions, wallets, smart contracts, and network activity are public and can be analyzed.
---
What kind of data is analyzed?
Some common on-chain metrics include:
Transaction volume: How many coins/tokens are moving daily.
Active addresses: How many unique addresses are transacting.
Exchange inflow/outflow: How many coins are moving into or out of exchanges.
Holder distribution: What percentage of coins are held by top wallets (whales).
Liquidity pool size & TVL (Total Value Locked): How much capital is locked in DeFi protocols.
Gas fees & network activity: Network usage trends.
---
Why is it useful?
On-chain analysis helps investors and traders to:
See real market activity beyond price movements.
Identify whale movements that might influence prices.
Detect potential risks like rug pulls, scams, or sudden sell pressure.
Track adoption trends — more active addresses usually indicate network growth.
---
Tools for On-Chain Analysis
Some popular tools include:
Etherscan / BscScan / Solscan: Explore blockchain transactions and wallets.
Glassnode: Analytics for BTC, ETH, and more (on-chain metrics).
Dune Analytics: Community dashboards for advanced queries.
Nansen: Tracks wallet activity, smart money movements.
DeFiLlama: Total Value Locked (TVL) across DeFi projects.
---
Example
If you want to check Bitcoin whale activity:
1. Look at large transactions on Glassnode or CryptoQuant.
2. See if BTC is moving into exchanges (inflow) → potential selling pressure.
3. See if BTC is moving out of exchanges (outflow) → holding, bullish trend.
---
In short, on-chain analysis is like reading the blockchain’s “diary” to understand what investors, whales, and networks are really doing — not just what prices are showing.
