On-chain analysis is the study of blockchain data to evaluate the health, activity, and potential direction of a cryptocurrency network. Unlike technical analysis, which focuses on price charts, on-chain analysis examines real-time data recorded directly on the blockchain. This includes transaction volume, wallet activity, token transfers, miner behavior, staking activity, and supply distribution.

For example, in networks like Bitcoin and Ethereum, every transaction is publicly recorded and can be analyzed. Traders and investors use metrics such as active addresses, exchange inflows and outflows, hash rate, gas fees, and large holder (whale) movements to understand market sentiment. If large amounts of tokens move to exchanges, it may signal selling pressure. Conversely, withdrawals from exchanges to private wallets can indicate long-term holding behavior.

On-chain analysis also helps identify trends like accumulation phases, distribution phases, and network growth. Metrics such as realized cap, MVRV ratio, and supply held by long-term holders provide deeper insights into valuation and investor behavior.

The key advantage of on-chain analysis is transparency. Since blockchain data is immutable and publicly verifiable, it offers objective insights that are not always visible through price charts alone. By combining on-chain data with technical and fundamental analysis, traders can make more informed decisions and better understand the underlying strength of a crypto asset.