Chain Wars: How to Analyze Cryptocurrencies

Market Tools for Analytics

Depending on your location, CoinFlip can offer a dozen coins and tokens through our ATMs, wallet app and OTC desk. Deciding which coin is right to invest in depends on a lot of factors, but knowing the basics of crypto market analytics will make this task easier. This article teaches how to interpret generic market analytics tools, then goes into the analytic tools available for specific blockchains.  

If you’re looking for investment strategies, we have a common strategy guide. We also have an overview of popular coins and tokens. 

Understanding Trends Through a Candle Chart 

There are many different formats and presentations for candle charts, but here we’ll deal with the simplest and most common representation, where green shows a price increase and red shows a price decrease over a 24-hour period.  

(image: Adobe) 

 Each "candle" represents one time period (in this case, a day) and tells you these things:

On the body we have: 

• Open Price – Where the price started at the beginning of the day. 

• Close Price – Where the price ended at the end of the day. 

And on the shadow or wick we see: 

• High Price – The highest price reached during the day. 

• Low Price – The lowest price reached during the day. 

Green color means: 

• The price went up, showing bullish sentiment. 

Red color means: 

• The price decreased, meaning bearish sentiment.  

The length of the body is also important. A longer body means lots of investors decided to do the same thing, while the inverse shows indecision.  

In an ideal situation, a savvy investor will buy after seeing a few long red candles, because that often signals an upcoming rebound, and after seeing a few long green candles they might sell, thinking that their fellow investors are overly optimistic.  

But the real world is rarely ideal, and a candlestick chart does not forecast the next day’s price, it just shows past trends.  

As an example, look at Bitcoin’s candlesticks from 2018-2020: 

(image: Investing.com) 

By the middle of 2020, BTC seemed to be at a highpoint. The peak from 2018 came and went, and the latest bull run from the start of 2020 seemed to be losing momentum. Conventional wisdom would say you better sell by the end of 2020.  

But then came one of the greatest bull runs in the history of investing, and all the peaks and valleys from the previous year smoothed out to look like a well paved road straight up a mountain:  

(image: Investing.com) 

Point is, to understand the market you need more than one tool, and in the next section we’ll cover some of the ways to analyze coins.  

Viewing the Market Through the Lens of Fear and Greed 

The Fear and Greed Index is a sentiment analysis tool designed to measure the emotions driving market behavior—specifically, fear and greed. It’s often used in both traditional finance and crypto to assess whether an asset like Bitcoin is undervalued (fear) or overvalued (greed).

(image: Adobe)

How It Works 

The index ranges from 0 to 100, with 0 meaning “extreme fear”, where nobody is buying and 100 meaning “extreme greed” where everyone thinks the market is headed for the moon.  

In crypto, the index typically aggregates data from several factors like: 

1. Volatility – Sudden drops may signal fear. 

2. Market Momentum/Volume – Rising prices with strong volume suggest greed. 

3. Social Media Sentiment – Spikes in hashtags or bullish posts = greed. 

4. Surveys – Investor sentiment polls (when available). 

5. Dominance – High Bitcoin dominance may signal fear (flight to safety). 

6. Trends – Google search trends for crypto-related terms. 

The shortcoming of the Fear and Greed Index is that it measures sentiment, not reality. Crypto investors tend to be optimistic and whole coins operate entirely on hype (known as memecoins). The index is also only as good as the data it’s trained on, so a lazily programmed chart won’t provide great insights. Most investors use fear and greed as a gut-check to help confirm or deny what an investor thinks most of their peers are thinking before running analysis with other tools.  

Now that you know what dynamics the Fear and Greed Index draws from, it’s a good idea to check these data sources before making any big moves. 

Network Activity Tools 

A good way to see the health of a blockchain is to check that it’s being used.  

Coin-Days Destroyed Analysis 

All coins that use the Proof-of-Work consensus mechanism to help the system nodes come to agreement on the state of the blockchain have a public, built-in way to gauge network activity called block difficulty, which is a measure of how hard miners have to work to get a reward for processing a block of transactions. The problem is that block difficulty can be affected by the number of miners available or by users moving coins between their own wallets without exchanging any real value. Proof-of-Stake consensus mechanisms, like the one used by Ethereum, can be even more opaque, as block validators are chosen at random instead of through a dynamic math puzzle. A better gauge of network activity is a Coin-Days Destroyed (CDD) chart.  

Coin Days Destroyed (CDD) is a metric used to gauge the economic activity and long-term holder behavior on a cryptocurrency network. It adds context to transaction volume by considering how long each coin has been held before it moves. 

Here’s how it works with Bitcoin, the most common application of CDD: 

• 1 coin day = 1 BTC held for 1 day without being spent. 

• If you hold 5 BTC for 10 days, you accumulate 50 coin days. 

• When you spend or move those 5 BTC, 50 coin days are “destroyed.” 

This metric helps identify whether long-dormant coins are being moved. For example: 

• High CDD = older coins are being spent, possibly indicating long-term holders are cashing out. 

• Low CDD = recent coins dominate transactions, suggesting short-term swapping or minimal long-term movement. 

CDD filters out the “noise” of frequent small transactions by focusing on how long coins are held. Analysts use it to spot potential market tops (when old coins flood the market) or signs of accumulation (when long-term holders stay inactive). You can monitor CDD on an analytics site like Blockchair.  

Proof-of-Stake Commitments Analysis 

Ethereum and other decentralized blockchains that use a proof of stake algorithm to achieve consensus depend on hundreds or thousands of validators who have a vested interest in the network. The blockchain’s governing protocol requires these validators to put up a “stake”, that is a significant amount of collateral, and then it selects the node that will process the next block from this validator pool at random. If a staking validator attempts to defraud the network, it will lose its collateral. For Ethereum, staking requires 32 ETH, which is worth more than most people would willingly jeopardize – though you can join a staking pool and commit fewer ETH, but rewards will be lower.  

Staking often requires a time commitment too, and while your crypto is staked you cannot spend it. Many staking pools will ask to hold your crypto for a few days to a few weeks, or longer. You wouldn’t hand over your coins to a dying network, so a good gauge of network confidence is its Total Value Locked (TVL).  

(image: Adobe)

TVL in staking protocols is a critical metric because it reflects: 

• Network security: More coins staked means a more robust and decentralized network. 

• Investor confidence: High TVL suggests strong belief in the network’s long-term value and reward structure. 

• Liquidity dynamics: Locked coins reduce circulating supply, potentially influencing price dynamics. 

But it’s important to note that TVL is not reliable on blockchains that don’t feature native smart-contract ability, like Bitcoin, Dogecoin, or Litecoin. This is because there needs to be a smart-contract in place to guarantee rewards and enforce punishments when assets are locked.  

The important thing to remember is that TVL in crypto staking shows how much collateral is actively securing the network, providing insight into validator participation and long-term holder sentiment.  

You can check out TVL with free online analysis tools.  

Developer Activity Analysis 

Analyzing developer activity on a blockchain is a smart way for crypto investors to gauge the long-term potential and health of a project. Unlike hype-driven metrics captured by the Fear and Greed Index, dev activity reflects ongoing innovation, maintenance, and community engagement—critical for a project's success. You don’t need to be a coder to analyze dev activity, as most of the metrics we’re looking for are written in plain text.  

Green Flags

These are indicators that a project is cared for and might have a strong future.  

• Lots of activity in the code repository. Here’s Bitcoin Core’s Github repo. Notice that there are close to a thousand developers who have committed tens of thousands of changes on a regular basis for a decade. This is a good sign. Here are some popular code repos: CryptoMiso, Santiment, Artemis, GitHub (directly search project repos). 

• Developers have commit histories. While devs in crypto tend to be secretive, you can usually get an idea of their skill by clicking on their profile in Github or other repo sites. If they are active with a lot of iterative changes to their projects, that means they probably want to improve their skill and their projects. Github features a handy calendar in all profiles that shows when devs were busy and how much code they pushed.  

• Documentation and guides. Serious open-source developers want their tools to be used, so they’ll write instructions. Usually this comes as a .txt file in the code repository, but good devs will also put comments in their code. The format differs depending on the programming language or markup, but usually you can look for two slashes “//” or a comment tag: <!-- HTML Comment -->  

• On a project website it’s also a good sign if the dev community invites or incentivizes activity. This is often done through financial grants, hackathons, or live tutorials and conferences.  

• Published, public roadmaps and other future planning are a good sign. Here’s an example from Dogecoin. 

Red Flags 

• Sudden bursts of activity followed by darkness. This is indicative of hype-based coding, and you should be extra weary when it happens with a lot of tweets and social media activity.  

• Lots of forks and copy/pasting. Forks aren’t necessarily bad, most new coins start off as forks of existing models. What’s bad is when there’s a fork followed by superficial commits, and no serious changes to the code. Most flash-in-the-pan memecoins are just low-effort forks and have little chance of surviving long-term.  

• Small mysterious dev groups. If the devs go to great lengths to avoid any connections to other projects that could be normal safety and anonymity, or they might be trying to hide so that when something goes wrong they won’t be found out.  

Cross-Chain Bridge Analysis 

A blockchain bridge lets you move assets (like ETH or USDC) from one blockchain (like Ethereum) to another (like Solana or Arbitrum). Since blockchains are separate systems, they can’t talk to each other natively without a go-between. 

Bridge volume = the total amount of crypto transferred through a bridge over a given time (day/week/month). 

It tells you: 

1. How much user demand exists for moving funds across chains. 

2. Which chains are attracting users. 

Bridge activity matters because growing volume towards an asset indicates popularity, while sudden drops can signal programming issues or scandals. When bridges aren’t being used much for any blockchain that can confirm a “market fear” indication from the Fear and Greed Index, and lots of activity can confirm the opposite.  

Generally speaking, it’s a good sign when a blockchain is listed, adopted, or tracked by a high-volume bridge like Wormhole. You can monitor bridge volume on public websites like DeFillama or Dune Analytics.  

In short: Bridge volume analysis shows where capital is flowing in the crypto ecosystem. You can use this data to identify growth assets, or to confirm other indices.  

Active Wallet and Whale Tracking 

This is one of the more advanced analysis skills in the crypto world, and usually involves purchasing a software or service like Zerion or ArbitrageScanner. 

Active wallet and whale tracking involves two activities: 

1. Monitoring the number of wallets that have been accessed in a certain timespan.  

2. Identifying and monitoring large asset holders and the wallets of successful traders, known as whales.  

Since anybody can make as many wallets as they want on most blockchains, a sneaky way to pump the hype of a network is to create hundreds or thousands of wallets that hold very little or no actual crypto. That’ll make it look like the blockchain is popular. Sophisticated wallet trackers are software that monitor the blockchain to see which wallets are actually exchanging value, not just moving the same coins from one wallet to another to appear active. This is similar to CDD analysis, except the software also identifies which specific wallets are most active and can even judge profitability.  

Once the top wallets are identified, you can copy their trades and hopefully capture the same profits. It’s also good to know who the market-makers are because if a whale or a pod of whales increases holdings then suddenly attempts to sell it all, that could indicate a pump-and-dump scheme or other manipulation.  

Here’s the key takeaway: whether you buy tracking software or not, before you invest in any blockchain you should look up who the whales are to make sure there isn’t a concentration of wealth in one person or group. This information is public for most blockchains, but may take some digging. Here are the top Bitcoin wallets, as an example.  

How to Use Crypto Analysis Tools Together 

To make informed investment decisions in the crypto space, it's essential to combine multiple on-chain and sentiment-based analysis tools. Start with candlestick charts to identify price trends and short-term momentum. Cross-check that sentiment using the Fear and Greed Index, which gives a quick snapshot of how investors are feeling—whether overly cautious or irrationally exuberant. Dig deeper with Coin Days Destroyed (CDD) to understand if long-term holders are moving their assets, which can signal upcoming market shifts. 

Next, evaluate the Total Value Locked (TVL) in staking protocols to gauge confidence and commitment in proof-of-stake blockchains. Follow that with an analysis of developer activity, using GitHub and analytics platforms to see which projects are under active development—an essential indicator of long-term viability. 

Then, examine bridge volume to track which blockchains are attracting real liquidity and cross-chain interest. Lastly, if you have the ability, you should use wallet and whale tracking tools to monitor capital movement and watch for manipulation or signs of institutional accumulation. 

When used together, these tools give you a comprehensive picture of both the technical health and market sentiment behind a blockchain—empowering smarter, data-backed investment decisions in a complex and fast-moving ecosystem. 

Or, Take the Shortcut and Call CoinFlip Preferred 

CoinFlip’s OTC desk is staffed with Certified Digital Asset Advisors who have access to advanced market analysis tools, such as Messari Enterprise. Our client managers swim in crypto data all day, so they’re well qualified to answer questions about the market or specific coins and tokens. They can also assist individuals or institutions with bank wire transfers and compliance.  

Financial Advice Disclaimer: Nothing in this article constitutes professional or financial advice, performance data or any recommendation that any specific cryptocurrency, portfolio, index, investment product, transaction or investment strategy is suitable for any specific person. You assume the sole responsibility of evaluating the merits and risks associated with all financial decisions and should seek the advice of a registered financial advisor when in doubt.