Maybe you often receive notifications, “whale” is transferring assets to the exchange, or “shark” is buying large amounts of Bitcoin. Where does that data come from? That is on-chain data. On-chain data stored on the blockchain started to get people’s attention because of its importance when investing in cryptocurrencies. So what is on-chain data?
Whenever you perform an interaction on the Blockchain, that action is saved and generates on-chain data. This data is stored forever in the blockchain. The opposite of on-chain is off-chain. For example, data about transactions in any exchange is off-chain data because only that exchange knows it.
On-chain data contains all the activities of that blockchain, so if you know how to mine it, it will answer a lot of questions from simple to complex such as whether there is an active wallet on this blockchain, how many people invest in the project This, or deeper, we also know the profit and loss position of investors in the market.
Features of on-chain data analysis
Onchain data sources are valuable data sources if you know how to mine them. Some of the characteristics of on-chain data are:
- Credentials: On-chain data “does not lie”, they will provide accurate and objective information about what is happening in the market. This is the most reliable source of information available today.
- Accurate and fast information
- Real-time: On-chain data keeps us updated on the behavior of investors in the market as they trade.
- Investment support: On-chain data analysis helps to prevent situations, make reasonable investment decisions.
For example: In case the price drops, by tracking on-chain data, you know that: “large” wallets are not selling and continue to buy, perhaps, this is the time when you should consider buying rather than selling in bulk.
Some notes when analyzing data On-chain
Crypto is still a fairly new market, so when doing on-chain analysis, you need to keep a few things in mind such as:
- Equip knowledge and experience: Users must equip themselves with knowledge of blockchain platforms as well as multi-dimensional perspectives to evaluate information.
- Update information regularly: On-chain data happens in real-time, but market behavior changes constantly, so information also needs to be updated regularly, to act quickly.
- Aggregate and analyze information in bulk: To make appropriate decisions based on on-chain data, you must perform data analysis in large volumes, especially with investors with big effects
Effective On-chain Analysis Tool
To exploit the full potential of on-chain data, which is still a problem for many people, at present, tools to support large-scale analysis of the overall market you can refer to such as Glassnode, Coinmetric, or chain analysis. If you want to analyze the perspective more closely from the perspective of thousands of individual investor wallets, then SharkScan.io will be an option you can refer to. Sharkscan provides you with the common, unique investment points of thousands of investors at the same time, as well as any of their buying and selling actions, thereby making your own investment decisions.
On-chain data is a very powerful tool that, if you know how to use it, will help you make investment decisions in the cryptocurrency market. If you are determined to go long in this market then on-chain data will be part of that journey.