Many investors want to embrace cryptocurrency but lack the necessary data to do so safely. Traditional assets have established providers for various metrics that help assess opportunity and risk. However, is there comparable data available for nascent asset classes like cryptocurrency? The answer is yes, and more, according to blockchain analysis firm Chainalyis.
Cryptocurrencies operate on transparent, decentralized ledgers known as blockchains, recording every transaction and participant activity. This on-chain data provides unique insights into crypto assets that are not feasible with traditional assets.
In this analysis, Chainalysis provides tools to draw actionable insights from on-chain data. They group addresses into wallets controlled by distinct entities, enabling transaction trend analysis across market segments and participants.
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The report focuses on three dimensions: distribution, liquidity, and market composition. On-chain metrics are used to assess these dimensions for Bitcoin, Ether, USDC, and FTX’s FTT token.
Additionally, the distribution is evaluated by examining the number of wallets holding the token and the concentration of supply within those wallets. Wider distribution and lower concentration indicate decentralization and widespread adoption.
Moreover, liquidity, an essential criterion, is assessed by analyzing the number of monthly active wallets. High liquidity enables easy trading, better price discovery, and resilience during market turbulence.
Furthermore, Chainalysis provides examples and comparative data for these dimensions to help investors make informed decisions about crypto assets.
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