In this new article, we will tell you what it takes to become a competent specialist in the field of on-chain analysis.
Blockchain technologies have endowed the economic space with a unique feature: transparency. Now market participants can monitor financial transactions. But, if everything were so simple, then cryptocurrency market analysts wouldn’t be needed. That means there is a catch. In this new article, we will tell you what it takes to become a competent specialist in the field of on-chain analysis and we will also talk about what on-chain analysis is.
What is on-chain analysis?
Before we begin to understand the specialty, let’s take a closer look at the field itself. On-chain analysis is a special methodology used in the space of blockchain technologies. It was developed to perform 2 basic functions:
- research and explanation of the investor’s behavior on the market — usually they act according to certain verified schemes;
- forecasting changes in the price of a cryptocurrency due to analysis of blockchain data.
However, the use of on-chain analysis is not limited to these two points. With it, people can also:
- identify periods in which it is more profitable to purchase or resell assets;
- identify existing market systems;
- track funds stolen by scammers;
- predict long-term and short-term market trends;
- monitor the actions of crypto whales, which affect market sentiment.
In other words, on-chain analysis is an important tool that helps investors, traders, and entrepreneurs navigate the world of cryptocurrencies and make more profitable transactions.
On-chain analysis and features of crypto trading
Trading in the traditional financial market is a rather unstable “entertainment” associated with constant risks and dependence on fluctuations in asset prices. Things are even more interesting in the crypto market.
Cryptocurrency is characterized by a high level of volatility, which means that it is sometimes extremely difficult to keep up with its price jumps. From time to time, crashes or rises of such amplitude occur that can either destroy or enrich the investor.
The use of on-chain analysis techniques significantly simplifies the game in the crypto market. Traders begin to see the causality of certain events and, based on this, make conclusions that may lead to profit.
Free platforms for on-chain analysis
On-chain analysis is based on metrics. Many of them are publicly available — the user does not have to pay for using data. On special platforms, people can learn the basics of on-chain analysis. Let’s take a look at some of them:
- The Block
All the necessary information for on-chain analysis is presented in the Data section. The metrics clearly show the total transaction volumes, active and new addresses, miner income, average transaction fees, etc. On the downside, the data on this site is updated every 2 days — but this is quite enough to determine the current market trend. The platform provides access to data from the Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) networks.
On this analytical platform, there are more than 10 metrics with which users can build a complete picture of the crypto market. It offers a user-friendly interface, which is a good thing, especially for those, who isn’t an expert in on-chain analysis yet.
- Look Into Bitcoin
Many charts on this platform are available even to unregistered users. The platform allows you to study the Bitcoin market, learn the basics of investing in the world’s first cryptocurrency, and predict prices in real-time.
What does it take to become a good on-chain analyst?
As we have already found out, the field of on-chain analysis is a very fertile ground for development in the cryptocurrency space. Let’s look at what skills an on-chain analyst should have to succeed in this specialty.
- Ability to decipher and analyze data
A basic skill without which is very important to analytics. Cryptanalysis is built on metrics, graphs, and symbols. A competent on-chain analyst must be fluent in basic concepts and notations.
- Understanding of the mechanics and principles of blockchain
Transaction, block, hash, address, commission, gas — these and other words should be familiar to an on-chain analyst.
- Knowledge of Python and SQL programming languages
Special programs save time and simplify the work of analysts, but in order to use them analysts should have some programming skills.
- Financial literacy
It is impossible to navigate the space of the blockchain economy without understanding the basics of the financial system.
- Attention to details
In the blockchain environment, everything consists of nuances and details. Operations or systems that seem similar at first glance may have different specifics and perform different functions. The goals of such systems may also differ, and in this case, it is very important to be able to explore the nuances and go into detail.
The growing popularity and demand for on-chain analysis techniques in today’s digital landscape underscore their pivotal role in understanding and navigating the complex world of cryptocurrencies.
As blockchain technology continues to evolve, these techniques provide invaluable insights, enabling investors, researchers, and enthusiasts to make informed decisions and predictions within the volatile cryptocurrency markets. The ability to dissect transactions, trace assets, and detect patterns in real-time not only enhances market transparency but also fosters a more secure and trustworthy ecosystem for all participants.
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SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.
Why Is On-chain Analysis So Popular And How To Learn It? was originally published in The Dark Side on Medium, where people are continuing the conversation by highlighting and responding to this story.