Bittime - Data about trading activities and crypto transactions has become very important for investors and market participants. Two metrics often used to analyze the crypto market are On-Chain Data and Trading Volume .
In this article, we will learn the differences between these two metrics and how they can provide valuable insights for market participants.
Check Today's Crypto Market:
What is On-Chain Data?
On-Chain data is an important source of information in crypto analysis because it provides direct insight into the activities and transactions that occur within the crypto network.
On-Chain Data Analysis can be used to understand market trends, investor behavior, and the fundamentals of a particular crypto asset.
It can also help in identifying trading patterns and signals that may be hidden in the transaction data recorded in the blockchain.
By properly understanding On-Chain data, investors can make more informed and intelligent investment decisions in the highly dynamic crypto market.
Some types of information that can be found in On-Chain data are:
1. Wallet Address
Every crypto transaction has a source and destination wallet address involved. On-Chain data records the wallet addresses involved in each transaction.
2. Number of Coins
Information about the number of coins or tokens transferred from one wallet address to another is also recorded in On-Chain data.
3. Transaction Time
Every transaction has a recorded time when it occurred in the blockchain. This includes information about when the transaction was made.
4. Network Power
On-Chain data can also provide insight into the strength of a crypto network, such as hash rate in the case of Bitcoin, which measures the total computing power used to mine and process transactions on the network.
Also Read: Understanding Volume in Cryptocurrency Trading
What is Volume Trading?
Trading Volume is a measure of the number of crypto assets traded in a certain time period, such as 24 hours or one week.
This is one of the most important metrics in crypto market analysis because it shows how active the market is and how many assets are being traded by market participants.
Trading Volume is usually measured in units of a specific currency, such as Bitcoin or US dollars. For example, Bitcoin Trading Volume shows the total amount of Bitcoin traded in a certain time period, while Trading Volume in US dollars shows the total value of transactions carried out in US dollars.
Trading Volume reflects market liquidity, namely the ability to quickly buy or sell crypto assets without significantly disrupting market prices.
The higher the Trading Volume, the more liquid the market, which can indicate high interest from market participants and increase price stability.
Trading Volume also provides information about market activity and investor sentiment.
For example, a significant increase in Trading Volume may indicate increased interest from traders and investors, while a decrease in Trading Volume may indicate uncertainty or lack of interest in a particular crypto asset.
In crypto market analysis, Trading Volume is often used in conjunction with other technical indicators, such as moving averages or momentum indicators, to identify market trends and make better trading decisions.
High Trading Volume is often seen as confirmation of significant price movements, while low Trading Volume can indicate weakness or uncertainty in market trends.
Thus, Trading Volume is one of the most important metrics in crypto market analysis as it provides insight into market liquidity, trading activity, and investor sentiment.
By understanding Trading Volume well, traders and investors can make better and more informed trading decisions in the highly dynamic crypto market.
Also read:
| How to Buy BTC | How to Buy JUP |
| How to Buy ETH | How to Buy DOGE |
| How to Buy PYTH | How to Buy SOL |
Difference Between On-Chain and Volume Trading
The basic differences between On-Chain data and Trading Volume are:
1. Data Source
On-Chain Data comes directly from the blockchain, while Trading Volume comes from the crypto exchange platform where the assets are traded.
2. Focus Analysis
On-Chain Analysis focuses more on transaction activity and asset ownership within the blockchain, while Volume Trading focuses on trading activity on the exchange platform.
3. Information Provided
On-Chain Data provides insight into the activity of investors and crypto asset holders, such as fund flow, accumulation, and coin distribution, while Trading Volume provides an overview of market liquidity and the level of trading activity.
4. Correlation with Price
On-Chain Data can provide an indication of a crypto asset's fundamentals and potential future price movements, whereas Trading Volume is usually more related to price volatility and market liquidity.
5. Profit
On-Chain Data provides insight into the activity of investors and asset holders, makes it possible to monitor the flow of funds, accumulation, and distribution of coins, and is useful for analyzing long-term trends and fundamentals of crypto assets.
Trading Volume indicates market liquidity and trading activity, is useful for determining levels of market interest and participation, and can provide signals about price volatility and potential trading opportunities.
Also Read: What is a Market Signal?
How to Use These Two Metrics in Market Analysis
The following explains how to use on-chain data and trading volume.
1. Combination Analysis
Combining information from these two metrics can provide a more complete understanding of market conditions and potential price movements.
2. Monitoring Investor Behavior
On-Chain Data can help in understanding long-term investor behavior, while Trading Volume can provide insight into short-term trading activity.
3. Spotting Divergences
Identifying divergences between On-Chain Data and Trading Volume can be a signal for potential trend changes or trading opportunities.
4. Signal Confirmation
Uses these two metrics to confirm trading signals or market trends identified by technical or fundamental analysis.
How to Buy Crypto on Bittime
You can buy and sell crypto assets in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
To be able to buy crypto assets on Bittime , make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet . For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH ), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also Read:
What does Call Options mean when trading?
Near Protocol (NEAR): Blockchain Platform Bringing Innovation to the Crypto Ecosystem
DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
Comments
0 comments
Please sign in to leave a comment.