Basic Onchain Data Analysis
In the world of crypto and blockchain, the term onchain is being mentioned more than ever, especially when talking about transparency, security and transaction data. With the rapid growth of blockchain technology, understanding and analyzing onchain data is not only a competitive edge but also a key factor that helps investors and institutions make better decisions.
1. What is onchain data and why does it matter?
Onchain data is all information recorded directly on the blockchain and verified by thousands of independent nodes. Since it cannot be modified or manipulated, this is the most transparent and reliable data source in the crypto market.
Why onchain analysis is important:
- It cannot be faked. Charts can be drawn and news can be bought, but onchain activity cannot be forged.
- Accurate information. Onchain data reflects real actions happening on the network and is not influenced by rumors or emotions.
- Real time behavior tracking. You can observe whale wallets, funds and smart money to understand how capital is moving.
- Better forecasting. Onchain often leads news. For example, the price may drop but large wallets keep accumulating which can indicate a potential reversal ahead.
- DeFi evaluation. Liquidity, revenue and capital flows can all be checked directly onchain.
However, not every transaction has investment meaning. You need to distinguish exchange wallets, contract wallets and individual wallets and always place the data in the right market context to avoid misinterpretation.
2. Basic onchain analysis methods
2.1 Tracking overall capital flows
Start by monitoring inflows and outflows from centralized exchanges for major crypto assets and stablecoins. Platforms like Glassnode, CryptoQuant and IntoTheBlock allow you to see how many tokens are being deposited into or withdrawn from exchanges across different timeframes.
When exchange inflows surge, it often signals selling pressure. When outflows increase and assets move to personal wallets, it usually reflects accumulation.
Example. In the chart below, you can see net BTC inflows into CEX rising from October 2025, which may indicate that investors are bearish during this period and this is why BTC keeps trending down.
Source : Cryptoquant Net BTC deposits to CEX over the past year
Next, comparing stablecoin balances on exchanges is equally important. When stablecoin supply increases on CEX, it may signal buying demand and vice versa. Stablecoins are the fuel that drives the market and help push prices higher. Investors use stablecoins to buy altcoins and when they want to sell they convert altcoins back into stablecoins.
Source:Cryptoquant Net USDT Deposit to CEX in the Past Year
Example. In the chart below USDT (ERC20) on CEX increased from July 2025 and reached a peak of 6.9 billion USDT on August 22, 2025. Today on November 22, 2025 it has dropped to below 420 million. As a result, the market rallied strongly in August and is now falling sharply.
2.2 Identifying and tracking whale wallets
Whale wallets are addresses that hold large amounts of assets or transact with significant size. Using tools like Nansen, Arkham or DeBank, you can identify exchange wallets, fund wallets and individual whales. Once you find these wallets, the next step is to track balance changes, trading frequency and actions such as accumulating tokens, providing liquidity or withdrawing liquidity.
Wintermute a smartmoney to watch
Example. With large wallet addresses, Arkham offers a free tool that labels them as entities and displays names, social links, portfolios and transaction history. You can enable alerts for each action from these wallets such as transfers, buys, sells or interactions with smart contracts which helps detect early market moves.
3. Tracking and learning from smart money
3.1 Identifying smart money wallets
Start by using data from Nansen, Arkham Intelligence or Gmgn to filter wallets ranked highly in profitability and trading performance. Prioritize wallets with consistent trading behavior, strong long term returns and early participation in quality projects such as seed or private rounds or buying before major price rallies.
PNL ratio of meme traders who bought early
3.2 Analyzing trading behavio
- Tracking capital flows. Observe when smart money deposits or withdraws assets from exchanges, their asset allocation and stablecoin movements. These signals often appear before trend shifts.
- Buy and sell history. Check trading frequency, long term holding ratios compared to short term trading and preferred asset types such as L1, L2, DeFi or NFT to understand their investment profile.
- Capital management strategy. Look at portfolio allocation across top cap, mid cap and low cap assets to understand risk appetite. Also track how they rebalance when the market changes.
3.3 Learning and applying strategies
You can follow the patterns you observe but you should not copy them one hundred percent. Adjust the strategy to your own capital size, profit goals and risk tolerance. The important thing is monitoring smart money consistently to catch sudden shifts especially when they change strategy or exit positions. Following wallets is a reference tool, not something to mimic blindly.
Crypto asset allocation ratio
4. Free onchain analysis tools
Dune Analytics
Dune is a powerful platform for extracting, analyzing and visualizing blockchain data from chains such as Ethereum and Arbitrum. You can use SQL to create dashboards, explore transaction history, smart contract interactions and wallet behavior. It allows users to build analytical charts without needing advanced programming skills.
Arkham Intelligence
Arkham is an onchain analytics platform focused on tracking wallet identity. It uses entity labeling to identify organizations, funds and individuals behind blockchain addresses. Users can follow capital flows, analyze smart money actions, detect unusual activity and build trading strategies based on wallet behavior. Arkham makes onchain investigation simple and precise without requiring technical expertise.
Gmgn
Gmgn is a real time dashboard for memecoins and tokens. It provides fast data on trades, top buyers, price charts, smart money activity and early signals for trend discovery. With a simple interface, Gmgn helps users track short term opportunities, find new tokens and evaluate risks based on flow behavior which is especially valuable for degen traders.
DefiLlama
DefiLlama is the largest aggregated dataset in DeFi with TVL, volume, fees, revenue and capital flows across protocols and chains. It allows users to monitor liquidity shifts, compare protocol performance, view historical charts and analyze ecosystem trends. With transparent and ad free data, DefiLlama is a standard reference for the crypto community.
DeBank
DeBank is an onchain portfolio analytics wallet that supports multiple chains and focuses on DeFi asset management. Users can view total assets, debt, LP positions, transaction history and real time wallet data. DeBank also includes SocialFi features that allow tracking other wallets, viewing smart money trades and building watchlists. It is a powerful tool for asset management and wallet behavior research.
Notes
- Keep in mind a few important points to avoid wrong conclusions or poor investment decisions.
- A single onchain metric cannot give a complete picture when viewed in isolation. For example, BTC outflows from exchanges can be seen as accumulation which is bullish but during a weak market it can also signal fear and defensive moves to cold wallets. Always analyze data within broader market context.
- Even though onchain is transparent, we do not always know the real owner behind a wallet. A whale wallet may belong to a fund, an exchange or multiple people. Labels such as whale or smart money are relative and may be inaccurate.
- Some onchain transactions do not reflect real demand such as wash trading in NFTs or new tokens. If you judge activity simply by rising transaction counts without deeper analysis, you may draw the wrong conclusions.
- Traders focus heavily on exchange flows while long term investors look at metrics like MVRV, HODL waves or long term holder supply. Know your investment goals to choose the metrics that align with your approach.
- Platforms like Nansen, Glassnode and Dune Analytics may show different numbers due to different data collection methods. Comparing multiple sources provides a more accurate and balanced view.
- Onchain reflects capital flows and user behavior inside blockchain networks but prices, news, regulations and macro events come from the offchain world. Relying only on onchain data creates blind spots. Combine multiple methods for the most accurate analysis.
5. Conclusion
Onchain data gives investors a clearer view of what is truly happening in the crypto market. Tracking capital flows, wallet behavior and network conditions helps investors avoid noise and gain an early advantage over most of the market. However, like any analytical method, onchain analysis only delivers real value when used in the right context and paired with experience.
Disclaimer: This content does not constitute investment, tax, legal, financial or accounting advice. MEXC provides this information for educational purposes only. Always do your own research, understand the risks and invest responsibly.
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