The blockchain offers investors the possibility of accessing real-time and past data that can help them understand market movement, investor's behavior, project's action and the overall health of a network/project. This makes investment in Blockchain financial services very secure and desirable because investors are well equipped with the tools they need, and things are done in a transparent and secure way.

What is Onchain Data?

Onchain data refers to all the information and transactional data that is permanently recorded on a blockchain. This data is immutable, meaning once it is written, it cannot be altered or deleted. Onchain data includes a wide range of information, such as:

1. Transaction Data: Details of transactions between addresses, including sender and receiver addresses, transaction amounts, and timestamps.

2. Block Data: Information about each block in the blockchain, such as block height, block hash, timestamp, the number of transactions in the block, and the miner or validator who created the block.

3. Smart Contract Data: For blockchains that support smart contracts (like Ethereum), this includes the code of the smart contracts, their state, and any interactions with them.

4. Account Balances: The balance of cryptocurrencies held by each address on the blockchain. Shows the whales and their holding power.

5. Network Statistics: Data related to the overall state of the blockchain network, such as the total number of transactions, network hash rate (for proof-of-work blockchains), staking information (for proof-of-stake blockchains), and other metrics that reflect network activity and health.

Why Onchain Data Is Relevant.

Data Integrity: The immutable nature of blockchain ensures that once data is recorded, it cannot be altered, providing a reliable source of information which an investor can trust when making Financial decisions.

Transparency: Onchain data is accessible and verifiable by anyone. This transparency allows you to see exactly what is happening within a blockchain network. This fosters trust and confidence.

Analytics: Today, there are several Blockchain platforms, like Glassnode that turn raw blockchain data into actionable insights. These insights comes useful when making investment indicators.

Limitations Of Onchain Data In Analysis

Onchain data do not account for factors like news, regulatory change, etc. The Crypto world is affected by the above factors, thus, one should not focus solely on Onchain data when making investment decisions.

A second limitation of onchain data comes from Whales manipulation. Manipulation here is not on the integrity of the data recorded Onchain but on the true intention behind the data. Whales can create a buying impression on a particular asset only to exit the market at their convenience. Following those Whale calls can mislead investors.

Furthermore, Historical data may not always predict future price movements. There have been cases where previous cycles of flow failed to repeat.

3 Key Onchain Indicators to Monitor

Token Movements: Through platforms like Glassnode,Nansen, that turn raw data into useful insights, one can Monitor the transactions of specific tokens. This can offer valuable insights into market sentiment and potential price movements.

Smart Money Activity: Identifying and tracking wallets that consistently achieve high returns, particularly in specific activities such as liquidity provision, Staking and decentralized exchange (DEX) trading. These "smart money" wallets often employ sophisticated strategies that can indicate profitable opportunities and market trends. By following their actions, one can gain an edge in understanding where the market might be heading.

Holdings and Activity of Whales and Institutions: Keeping an eye on whales and institutional investors is a good practice to understand market shifts. These entities often have influence over market dynamics due to their large holdings. By understanding their strategies and movements, one can better predict significant market changes and align their investment strategies accordingly.

The future Of Onchain Data Analysis

As Onchain data grows with growing transactions, smart Contract calls,etc, Onchain data will become more reliable. With the knowledge of Market manipulations by Whales, investors have been equipped, they can thus avoid following those calls from Whales or atleast follow them with caution.

With the current integration of Artificial intelligence and machine learning, Onchain data will be made more accurate and powerful..