Cryptocurrency Analysis Using On-Chain Metrics - (Chris Coney & Marija Matic) WCSS:002

cryptocurrency 4 months ago

For 7 Best DeFi Strategies To Make You Money click --- Hi there, guys, and welcome to this week's edition of the Weiss Crypto Sunday Special, special with me, your host, Chris Coney. My guest analyst today is Marija, and the macroeconomic topic that we will be discussing is on-chain metrics. It's one of my favorite topics this one. At least is at the moment. So this whole field of analysis has kind of cropped up, and it's exclusive to crypto because when it says on-chain, it's like on the blockchain. And because blockchain technology is transparent, it allows us to do this whole new field of analysis. So, Marija, please start us off here. When we say on-chain metrics, what exactly are they, and why do they matter? Marija (01:04): Hi, Chris. When we say on-chain metrics, it means the information which we can extract from the blockchains. Since majority of the blockchains are transparent, there's a tons of information which we can extract from there, related to the transactions, related to the usage of the centralized applications, the flow of cryptocurrencies, et cetera. So there are many, many things which are very important. Chris (01:33): So why does this data matter? And what kind of things can they tell us? This data on the chain? Marija (01:41): Well, they can help investors. For example, if you have invested in some token, you would be interested to know if the usage of the token, the number of the transactions are growing or falling. If you have invested in, for example, a governance token of some decentralized application, you would be interested to know how is that the decentralized application performing and the token how it's performing. You would be interested to know is the number of active wallet users growing. Is the number of general wallet users growing or falling? And there's all sorts of information which are very important to investors. There are things which are important to traders. For example, you can find out the inflows or outflows of cryptos from and to centralized and decentralized exchanges. So you can know and find out if majority of investors want to sell their crypto. If there are large inflows, or they're just buying and accumulating and sending them to their wallets. You can look at the dormant wallets. Very, very large wallets dormant for, I don't know, seven years or more. You can track if they're moving. If people are spending from those wallets. If the old HODLers, very, very long-term investors, are selling or not. So there are tons of information which you can find out, and it's quite important. Chris (03:25): So that's the bit I've seen passed around a lot recently. The flows in and out of major exchanges. So I suppose with like Bitcoin, if people are generating a new address every time they receive a transaction, it's kind of hard to track that, which is what individuals do. But with exchanges, it's a bit different. With my exchanges, they give me a single Bitcoin address for all my deposits, right. So at least you could then see that that would always be the same. So in that instance, you'd know that wallet belongs to a particular exchange, right. And then you could see how many Bitcoin were flowing into that. Or, if it were a stable coin, you could see how much tether was flowing in or out. And what most people were saying recently is if a lot of Bitcoin, let's say, is been taken off centralized exchanges, the assumption is that people aren't intending to sell it in the short term. Is that basically it? Marija (04:23): Yes, that's true. For example, we are tracking lots of things as a Weiss analytical department, and the last week we've seen, there've been many, many outflows. More outflows than inflows. And we're also tracking specific exchanges like Coinbase or Binance, or Wabi. And because it's very important, we can say that Coinbase... We know that the Coinbase is mostly used by institutions, and we know that Binance is mostly used by retail investors. So we can check who is accumulating more at the moment. Is it institutional investors? Is it retail, et cetera? We can check some of the Chinese exchanges where we can see how the miners are. Are they selling or not? So, yeah, like last week, we've seen a lot of accumulation by both retail and institutional investors when it comes to Bitcoin. But when it comes to Ethereum and LINK and BNB, Doge, LTC, we've noticed that there were many inflows to exchanges since those coins were reaching all-time highs and jumping like crazy, while Bitcoin was kind of stagnant. And that's why people are probably depositing them to exchanges to try to time the top [porch 00:06:07] or just to be prepared. It's a normal reaction. Chris (06:10): That is interesting. So that would suggest if, so say Litecoin runs up in price, you see this big inflow of Litecoin into exchanges because people are preparing to take profits.
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