What Is On-Chain Analysis in 2025

2022-03-28, 02:05

We often see situations like this: large, meticulously crafted charts adorned with candlestick patterns, unusual indicators, and dense curves that hold almost no meaning for the general public. Especially as cryptocurrencies are cultivated into a massive ecosystem, these techniques have become more prevalent and often dictate how top traders determine when to buy and sell.

Known as “on-chain analysis”, this chart analysis means using public blockchain information to accurately estimate future market activities. This ultimately allows traders to formulate strategies and maintain a certain level of control across the market.
However, for beginners, this dense and complex world of on-chain analysis can seem daunting and overwhelming - especially when advanced financial and economic terminology is frequently used.

By 2025, on-chain analysis has significantly developed. Advanced AI-driven predictive analytics can now process multiple metrics simultaneously, providing traders with highly accurate probability-based forecasts. Cross-chain analysis integration enables a comprehensive understanding of the relationships between different blockchain ecosystems. Real-time sentiment analysis combining social media and news data has increased the accuracy of predictions to about 82%. User-friendly interfaces have democratized complex analytical tools, making them accessible to retail traders. Additionally, regulatory compliance checks have been integrated to automatically flag potential problematic trading patterns.

On-chain analysis of 2025: Latest developments

The on-chain analysis landscape of 2025 has significantly evolved, with several notable advancements that have changed the way traders interpret blockchain data:

AI-Driven Predictive Analytics

Advanced machine learning algorithms can now process on-chain metrics to generate unprecedentedly accurate predictive models. These systems analyze multiple metrics simultaneously to provide traders with probability-based market trend forecasts.

Cross-Chain Analysis Integration

On-chain analysis has expanded from checking a single blockchain to comprehensive cross-chain analysis, enabling traders to understand the connections between different blockchain ecosystems and their impact on the broader market.

Real-time Sentiment Analysis

Modern platforms now directly integrate social media and news sentiment with traditional on-chain metrics:

Indicator Type	Traditional (2023)	Advanced (2025)
Data Source	Only on-chain data	Blockchain + Social Signals + News API
Analysis Speed	hours/minutes	Real-time (seconds)
Prediction accuracy	~65%	~82%

Democratization of Analytics

User-friendly interfaces have made complex on-chain analytics available to retail traders, not just institutions. The platform now offers customizable dashboards with drag-and-drop functionality to create personalized metric combinations.

Regulatory Compliance Integration

On-chain analysis tools now include regulatory compliance checks, which automatically flag potential problematic trading patterns, helping traders navigate the increasingly complex regulatory environment.
The evolution of on-chain analysis in 2025 represents a significant leap in cryptocurrency trading intelligence, transforming what was once considered an advanced skill set into a fundamental component of every trader’s toolkit. Gate continues to integrate these cutting-edge analytical capabilities into its trading platform, ensuring users have access to the most advanced tools available.

Those large and elaborate charts filled with candlestick patterns, unusual indicators, and dense curves are meaningless to the average person, but we crypto investors are constantly observing them. Especially as cryptocurrencies have developed into a massive ecosystem, these charts are ubiquitous, and analyzing them is often the way seasoned traders gauge when to buy and sell.

This type of chart analysis is known as “on-chain analysis,” which refers to using public blockchain information to make definite predictions about future market activities. Ultimately, traders use this analysis to develop strategies and have a certain grasp and control over their positioning in the overall market.

However, beginners may find this advanced and complex on-chain analysis daunting and overwhelming—especially since this analysis often uses advanced financial and economic terminology, which can leave beginners perplexed.

What is “on-chain”

Although the term “on-chain analysis” does seem a bit complex, the basic principle of this concept is based on fundamental information and is quite simple. The term “on-chain” refers to information derived from accessible blockchain data. Due to the decentralized and transparent nature of the decentralized finance world, all blockchain information, whether it is transaction information, holding addresses, price changes, or more complex financial metrics, is available to users for free.

Some indicators may require membership on different platforms to access, and even require you to have the technical skills to decode them, while most complete market indicators for various cryptocurrency assets can be found online.

But for some people, on-chain analysis seems to go beyond the depth they imagined and exceeds their abilities. In reality, almost every trader has engaged in on-chain trading—even if they are not aware of it. Simply reading the price chart of an asset and determining its current trading rate is a typical example of simple and accessible on-chain analysis.

The price chart represents “indicators.” While this may seem like an economics term and appears relatively complex, market indicators essentially refer to different aspects of market information, and asset performance can have a direct impact on it, which can also directly influence the performance of the assets.

On-chain analysis aims to provide deeper insights for financial analysts and traders to help them better understand how the current market reacts to internal and external stimuli—whether these are socio-political factors or general trading information. Many analysts and traders leverage this information by understanding the underlying systems that determine cryptocurrency performance to formulate trading strategies and position themselves better in the market.

For example, if a bearish market is fully in effect, many traders may have developed a strategy to continue accumulating the assets they want so that they can sell them for profit when the market trends upward. By doing so, many traders are able to better maximize the expected profitability of their portfolios and position themselves better in the current market environment.

Most investors may not have delved deeply into the ASOL or RHODL ratio charts, and the most basic standardized on-chain analysis refers to looking at price charts. Price charts are the foundation of all financial investments, determining the highs, lows, and stability periods of their respective financial markets. By analyzing price charts, investors can gain insights into the most viable time periods to buy, sell, or hold assets.

Taking Bitcoin as an example, if the price chart appears to be in a downtrend, this usually indicates that many investors choose to accumulate more Bitcoin over a period of time, whereas the opposite is true when the price seems to experience an uptrend. When investing in assets, investors typically first refer to the price chart, which also indicates that the first step of on-chain analysis is much simpler than previously imagined.

If you are just getting started with on-chain analysis, you may encounter some essential metrics.

on-chain analysis indicators

Price

Price is the simplest of all indicators. Essentially, the price reflects the current price performance of an asset over a specified period, usually detailed by candlesticks or simple lines marked in red or green (with green lines indicating positive movement and red lines indicating negative movement). This is the most valuable and straightforward method for determining asset performance.

For example, if an asset experiences a positive price movement, traders will consider that the asset is performing well and will be motivated to either sell or continue holding the asset to seize the opportunity for greater profits.

Throughout the market, investors can gain insights into asset performance through prices, and it has always been believed that this price insight can truly reflect the most valuable part of an asset — its valuation.

Transaction Count

You may be wondering why trade count is important? The number of trades often indicates the activities traders are about to engage in and their reactions to the market—this ultimately determines future market performance. Trade count is a comprehensive insight into general market trends, including buying and selling. However, trade count is best paired with price to fully understand how this trade count reflects the sentiments and thoughts of holders.

For example, if an asset depreciates significantly within 7 days, the trading volume may be high. This is often the result of traders selling to avoid panic buying or buying positions in that asset due to panic—but it may also indicate that more long-term traders are buying that asset to further increase their positions. This signals a bearish outlook.

Similarly, if the value of an asset significantly increases within 7 days, the trading volume may also be high. This could be due to a large number of traders experiencing “FOMO” and investing in the asset, or it could be because traders are selling their held assets to realize profits. This indicates a bullish outlook.

Using trade count in these situations can help general traders understand whether other traders are bullish or bearish on the market - which ultimately allows traders to grasp how the market might react in the coming weeks or months.

active addresses

Active addresses are another relative concept similar to transaction count. It refers to the number of cryptocurrency wallets holding the corresponding assets over a given period of time. Although there are clear differences between the two, the number of active addresses can indicate whether traders’ sentiment towards the market is bullish or bearish.

For example, if the number of active addresses increases sharply, it indicates that more investors are injecting funds into the asset. Even if this occurs simultaneously with negative price changes, the heightened interest of investors in the asset may suggest that traders have developed a bullish sentiment towards it and intend to buy more before the price momentum moves upwards, thereby profiting from it.

If the number of active addresses decreases, it usually indicates that many traders are selling their positions. Of course, many sell when the market value rises, but many also repurchase their positions or only sell part of them. However, if the number of active addresses decreases in the context of negative price movement, it may signal bearish sentiment, as individual holders may sell their positions without any returns.

Ultimately, by combining price, transaction counts, and active addresses, traders can gain insights into whether the cryptocurrency market is experiencing bearish or bullish sentiment.

What are the benefits of on-chain analysis for traders?

Although analyzing price charts is just one of hundreds of different on-chain analysis methods, it provides a solid reference foundation for many traders as their experience grows. The concept of on-chain analysis may seem complex, but in reality, it is a surprisingly simple core method that can inform investors in formulating investment strategies and positively impact their market positioning.

But it is important to remember that not every indicator will play a significant role in the way you choose to analyze the market. Like anything else, specific information will help you formulate the best strategy that aligns with your goals. For example, if you want to understand Gate’s perpetual cryptocurrency derivatives, you would focus on researching that rather than looking at the entire roster of derivatives available on the platform. The same applies to on-chain; just as you might want to measure whether there are more traders buying and selling Bitcoin or any other asset, you might monitor net transaction flow, transaction volume, long-term/short-term holders, etc.

Many traders consider a specific goal when they start to study on-chain analysis, and this goal will ultimately affect their overall response to the current market landscape.

Typically, when the cryptocurrency market is in a state of extreme bearishness or bullishness, professional analysts and traders tend to refer to various “basket” indicators; by comprehensively referencing these indicators, one can gain insights into the overall market activity rather than just niche markets. Doing so allows for a keen understanding of why the market reacts this way, which is far more important than merely referencing price charts.

How to use on-chain analysis

After reading this article, you may feel overwhelmed and not know where to start with on-chain analysis. However, it is important to remember that the cryptocurrency market is decentralized, making these resources accessible. Of course, there are many indicators that require expert membership or even your own software for effective analysis, but key “bundled” indicators are available on the internet at no cost.

Through on-chain analysis, you will gain further insight into the true workings of the cryptocurrency market. While its operation has similarities to many traditional financial markets, the significant market volatility leads to accelerated price fluctuations, a potential situation that typically does not occur in traditional financial systems. By analyzing various market indicators, you can usually gain a more detailed understanding of the overall factors that affect asset performance.

In addition, in-depth research on on-chain analysis can help you develop effective investment strategies based on the assets of interest. For example, if you hold a portfolio consisting of BTC, ETH, and LTC, you need to look at the metrics related to these assets, which can help you make informed decisions, thereby accumulating more of your chosen assets and potentially profiting from sales.

Finally, don’t be scared off by the term “on-chain analysis” and be unwilling to understand how the cryptocurrency market operates. You don’t have to be a financial or economic expert to delve into the analysis of the crypto market; through this analysis, you may completely change the way you look at investments and portfolios.