The public nature of the Blockchain continuously generates an endless flow of data, as every transaction and address leaves a clear trail. This information, known as on-chain data, provides a way of accurately analyzing the activity of the cryptosystem network.
Some indicators of the chain, such as the number of active addresses, the HODL wave, and hashrate have become well known in the industry, but the general public is only scratching the surface.
As the number of available on-chain indicators has grown to an overwhelming amount, finding out which ones are most useful to the average investor has also become a task. A good place to start is with the indicators of Average Deposits at Exchanges, „Sent From“ The News Spy directions and Miners Deposits at Exchanges.
Average exchange deposits
There is often some confusion when analyzing the flow of an exchange in and out. Buyers do not need to withdraw funds after buying cryptosystems and the same can be said for tickets, as the funds could remain inactive for quite some time before any transaction takes place.
Average Bitcoin Exchange Deposits
A better way to quantify that flow is by measuring the average size of the deposits. As shown in the chart above, each maximum size of the average deposit matches a local Bitcoin price pool. This movement could be the trail of a large cryptostraw whale capitulating and cutting its losses.
Such an indicator is especially true during a long-term downward trend. As mentioned above, on-chain indicators should not be analysed in total isolation. Capitulation could only occur after several months when the price shows no strength.
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Bitcoin „Sent From“ Addresses
Instead of measuring the number of active addresses, the 7-day average of the „Sent From“ address metric gives a clearer picture of network activity. This drastically reduces the noise of exchange withdrawals and the double counting of mixing services.
Bitcoin daily active originating addresses
Notice how each major peak in the daily average of the „Sent From“ addresses coincides with the short-term local price cap of Bitcoin. Such sudden spikes in the supports that move the currencies indicate short-term discomfort, although this is not necessarily indicative of a change in market trend.
Again, this indicator should not be interpreted without recognizing market trends. That case occurred during the April-July 2019 upturn, when the metric system recorded two peaks, indicating a cooling period, although prices continued to rise a few weeks later.