Cryptocurrency investments are becoming more popular today, especially with Bitcoin’s recent all-time high and the U.S. government’s pro-crypto stance. If you are considering diversifying your portfolio, investing in cryptocurrencies might be worth considering. However, like any asset class, crypto investment decisions are better informed when they are reinforced by relevant data and an understanding of current market sentiment, especially since crypto can be more volatile than many asset classes.
Two key indicators that can help you make more informed crypto investment decisions are on-chain metrics and blockchain-native data. These indicators provide you with real-time market information, which is largely unavailable to retail investors who trade more traditional assets, like stocks and ETFs. Those data are based on blockchain technology, a novel technology where every transaction made on a decentralized distributed ledger is available to everyone.
Key Takeaways
- On-chain metrics provide you with key data points that are unavailable to retail investors in traditional markets.
- Look for an increase in new and active addresses, and carefully monitor miner activity.
- Huge exchange inflows and outflows, as well as whale wallet movements and dormant wallets becoming active, can signal the beginning of a market trend.
- These metrics should not be used alone, but considered together for a better picture of the market.
Unique Indicators for Analyzing Cryptocurrency Markets
Public blockchain transactions are visible to everyone, making on-chain indicators a goldmine of insight into such trends as rising or falling activity. They can offer investors a view of the market’s pulse. This data is usually free and doesn’t require complex analysis, as several crypto analytics platforms like Dune, Nansen, and Glassnode put these metrics into a format you can easily understand. However, it is not advisable to look at every blockchain-native indicator; stick to those that mean the most to you. Those can be the indicators that have a significant impact on the market. In this article, you can learn about the metrics that matter most and how to interpret them for crypto trading and investing.
New Address Creation and Active Wallets
Cryptocurrency is stored in wallets, which have addresses. Whenever a new user comes on-chain, they create a wallet to handle their crypto. New addresses generated tend to be positively correlated with an increase in the coin’s price as seen in the graphic below, which shows a general correlation between Bitcoin’s price and the number of new crypto wallet addresses between over the roughly 10 years ended in late May 2025:
These new addresses show increased activity and adoption of a blockchain network, which could indicate growing bullish momentum.
Likewise, a rising number of active addresses over any time frame shows potential demand for that cryptocurrency.
Tip
Be careful of relying solely on this metric, as it can be easily manipulated. Airdrop farmers can create thousands of spam wallets, which might appear genuine on on-chain metric platforms.
Whale Wallet Movements
A crypto whale is an entity that holds a large amount of a particular cryptocurrency and is capable of influencing a coin’s price by moving it among wallets, making it look like authentic, robust trading volume generated by many unrelated investors. Whales are not determined by a particular amount, but by what percentage of a coin’s circulating supply they hold. For example, only four addresses hold 100,000 or more BTC, worth $66 billion as of June 17, 2025, according to BitInfoCharts. Sudden moves from wallets with huge holdings can quickly cause a spike or plunge in price, disrupting and even changing the current market trend.
Whale wallets moving their holdings to centralized exchanges are likely a sell signal as they begin a distribution phase. You can set up alerts on these wallets once you identify them and get instant notifications of any significant activity they take that might impact the market.
Exchange Inflows and Outflows
A cryptocurrency exchange is an online platform where you can sell or buy crypto. If data shows cryptocurrency is flowing into exchanges (which are called exchange inflows), it could be a strong distribution sign, showing that investors are selling off their assets.
Conversely, exchange outflows suggest investors are moving assets to cold storage (which potentially is a bullish signal). You should monitor exchange inflows or outflows of top exchanges such as Kraken and Coinbase, as volume on smaller exchanges has a minimal impact on the general market.
Miner Activity
Miners, who enter transactions into a blockchain network, can directly impact the price of a cryptocurrency, especially in shorter time frames. Miners usually sell a part of their crypto rewards to cover their running costs. But if they are selling more than usual, it is likely a bearish signal.
Important data points to look for are miner inflows, outflows, and reserves. Since 2024, BTC miners have sold off more of their holdings as the price increased. That profit-taking showed a negative correlation between reserves and price as miners liquidated their rewards amid the rally.
Halving events are another variable you should keep tabs on. Miners usually sell off their BTC holdings after a halving event (which happens every four years) as their rewards get smaller with each successful halving.
Dormant Wallet Activity
Dormant wallets are cryptocurrency wallets that show no recorded activity for an extended time (think five years and longer). Whenever these wallets suddenly become active, they spark curiosity among traders, especially if the wallets have huge crypto holdings or were last used during the early mining days.
When these wallets liquidate their assets, it could be a bearish signal and indicate a change of sentiment in the cryptocurrency in question. But if they transfer their assets to a new address without selling, it could be a strong bullish signal. (The identity of a wallet address owner is not readily shown, but a platform can confirm a transfer.) In 2023, three dormant wallets suddenly transferred $230 million of Bitcoin, after its price had been bullish two weeks prior. Per TradingView data, BTC surged after the wallet event, closing the year with almost $9,000 per coin in gains.
The Bottom Line
On-chain indicators provide unique insights about the cryptocurrency market, which you can use to make informed decisions without having to rely solely on traditional technical analysis tools. While on-chain indicators provide a way to see market moves in real-time, they should not act as the sole basis of your investing decisions. Fundamentals and high-impact news events can also cause big moves in the market, overriding the intended impact of these indicators. Stick to indicators that have a significant impact on the market and remember to keep an eye out for fundamental and news events, too.
