A Framework for Valuing Cryptoassets with On-Chain Data
Summary
This introductory report explains how blockchain-derived data can inform fundamental analysis of cryptoassets. It distinguishes this approach from technical analysis and sentiment analysis, surveys the role of data providers, and introduces a framework built from metrics on issuance, transfers, supply, and more complex measures such as NVT, MVRV, SOPR, and coin days destroyed. It also discusses Bitcoin’s issuance schedule as an example of how on-chain data can help assess supply and scarcity.
The central method is to interpret metrics in light of each asset’s technology, consensus and security model, transaction design, and monetary policy. Data vendors may calculate apparently similar measures differently, while a metric designed for Bitcoin may not translate directly to another network. The report therefore recommends adapting calculations as networks evolve and combining on-chain fundamentals with technical or sentiment analysis when forming an investment view. It presents a conceptual toolkit rather than a tested trading strategy, and emphasizes that crypto valuation methods remain in development.
Key ideas
- On-chain fundamental analysis uses blockchain records to assess cryptoasset activity and potential intrinsic value.
- Metric definitions and data-provider methods can differ, affecting comparisons and valuation conclusions.
- Researchers should understand a network’s technology and economics before interpreting its on-chain measures.
- Bitcoin-derived metrics may not apply unchanged to other assets or blockchain designs.
- On-chain analysis is presented as one input that should be adapted over time and combined with other forms of analysis.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.