Hello loyal users of CoinMarketCap, we just launched a new set of data to help you gain more insights about your crypto assets!
Our partner IntoTheBlock excels at extracting intelligence from the blockchain data of specific crypto assets. They generate signals that describe patterns such as on-chain activity and address profitability and ownership segmentation, among other things.
Where can you find this data on CoinMarketCap? CoinMarketCap has incorporated IntoTheBlock’s on-chain signals in a dedicated “On-Chain Analysis” tab for over 700 crypto asset pages including Bitcoin, Ethereum and XRP, to name a few.
How can these on-chain insights help me with my crypto investments?
Under the “On-Chain Analysis” tab on each crypto asset page, you will see a range of indicators, such as how many investors are making or losing money, the concentration of a cryptocurrency held by whales, and whether holders of a particular crypto asset are active or passive traders.
For starters, below are three ways a crypto retail investor can use these indicators. (Thanks to our partner IntoTheBlock for providing the detailed descriptions!)
To gauge the profitability of a crypto asset to current holders
Indicator 1: “Holders Making Money at Current Price“
What it is: IntoTheBlock takes every on-chain address (referred to here as a “holder”) that currently has a balance of the asset, and calculates the average price at which its assets were bought. Buyers who bought crypto at a price lower than the current price are “In the Money,” while those holders who bought at a price higher than the current price are known as “Out of the Money.”
Investors can use this indicator to answer questions such as:
- How confident is this asset’s investor base?
- Would most of them win or lose if they were to sell today?
- Where are the potential levels of support or resistance for the price?
Indicator 2: “In the Money“
What it is: This signal calculates the net change of “In the Money” addresses (refer to the above indicator “Holders Making Money at Current Price”). A bullish signal is given when “In the Money” addresses increase, and a bearish signal is given when it decreases.
To get a sense of the level of interest by big investors (e.g. institutional players, whales) in the crypto asset
Indicator 1: “Transactions Greater Than $100K“
This indicator is measured by the number of on-chain transactions in excess of $100,000 every day. It shows the trend in the number of these “large” transactions for the past seven days and their overall dollar value.
You can review the trend of large transactions for a particular asset and hypothesize how the investor base is composed. If the number is increasing, there could be more institutional players such as OTC desks or whales holding a particular asset.
Indicator 2: “Concentration” (i.e. activity growth among existing large holders)
This signal is based on the indicator, “Concentration by Large Holders.” It gives us a bullish reading when these large holders accumulate more tokens, and a bearish reading when they sell them off. Large players accumulating tokens and increasing the concentration of an asset could indicate that “insiders” are bullish. The opposite is true for a decrease in concentration.
Indicator 3: “Large Transactions”
This signal is based on the indicator “Transactions Greater than $100K.” When large transactions over the short run are greater than the long-term average, we get a bullish signal, reflecting increased activity by large players. When the short-term is lower than the long-term average, the indicator turns bearish.
3. To gauge how susceptible the crypto asset may be
Indicator 1: “Concentration by Large Holders Holders”
ITB categorizes holders by the level of concentration and holding time. This metric provides the percentage of circulating supply (“CS”) owned by “whales” (holding 1%+ of the CS), and large investors (holding 0.1-1% of the CS.)
Investors can use this metric to determine if an asset is too concentrated and if large holders can influence price significantly. If the asset is distributed evenly, there is little risk of larger holders impacting markets significantly.
Indicator 2: “Composition by Time Held” (i.e. if current investors are in for the long run or short-term)
This indicator segments the investors according to their holding period. It allows us to understand if investors are passive (1+ year before selling), very active (>1 month before selling), or somewhere in between.
This allows an investor to answer questions such as:
- Is there confidence amongst investors, indicated by long holding periods?
- Is price vulnerable to minor news updates, or are investors in for the long run?
Other On-Chain Analysis indicators available on CoinMarketCap
Price Correlation With Bitcoin: This metric tests the asset’s price correlation with Bitcoin over 30 days. The correlation indicator ranges from -1 to 1. -1 to 0 indicates a negative correlation as prices move in opposite directions. 0 to 1 indicates a positive correlation as prices move in a similar direction.
Transaction Demographics: This indicator tracks if an on-chain transaction happened during Asian (East) trading time or during European/American (West) trading times. The indicator provides a view of this split for the last 14 days. It is great for understanding the difference in geographic interest in the token.
Net Network Growth: This indicator measures an asset’s underlying net address growth. It’s calculated by taking the total number of new addresses created for a particular asset and subtracting from it the number of addresses that have gone to zero for that asset. It is great for estimating the growth in the utility of the token.
For more explanations on each of the above indicators, feel free to check out IntoTheBlock’s video tutorials.