There are thousands of altcoins in crypto, and honestly, when every altcoin except your altcoin is going up, it is frustrating to choose some from many and not regret it.
Before we start, here is a warning/caution:
Note: No indicator is intended to be used as a standalone indicator.Combining these on-chain indicators with technical analysis will produce the best results
A less overwhelming version
Create a filter to track the altcoins you like or are interested in and track prices until you find a high probability setting and then trade.
I use Santiment’s filters to add the top altcoins I like and track metrics to help me sort the tokens into the few that I can trade.
Here are the metrics I used:
1. Market Value to Realized Value (MVRV)
This indicator is fairly simple. It tracks the profit and loss (profit and loss) of investors who buy altcoins, depending on the time frame you provide.
For example, BTC’s 30-day MVRV tracks the profit and loss of buyers who bought BTC in the past month.
This is an oscillator, so it has a “zero line” and the MVRV line changes relative to this baseline.
The sudden 30-day MVRV (say 50%) surge indicates that 50% of the investors who bought BTC in the past month were profitable. When this happens, readers can expect a drop because investors can book profits, which pushes down the price of BTC.
The previous peak can be used to determine the local top.
(Red circle = partial top, black circle = partial bottom)
On the contrary, a break below the “zero line” indicates that there is widespread selling, and investors who have bought BTC in the past month are losing money.
Usually, when the market panics, market makers or whales tend to buy. (A similar trend is observed in the foreign exchange market, banks and institutions buy in panic. This is how the supply and demand zone using order blocks is formed.)
Therefore, the negative value of the 30-day MVRV is called the “opportunity zone” because it provides the whale with an opportunity to accumulate BTC.
Therefore, in my filter, I sorted the altcoins by 30-day MVRV and selected the top five most oversold altcoins.
2. Daily Active Address (DAA)
This indicator depicts the interaction between the user and the selected asset blockchain. If the DAA is close to the average, it indicates that investors are interested in the asset.
I use it to measure investor interest, which is very similar to using social volume or social dominance.
Note: For ETH, due to DeFi and smart contracts, DAA indicators cannot provide complete information.
3. Whale transaction count
This indicator tracks transactions worth $100,000 or more. Usually, seeing a sharp spike in this indicator coincides with a local top.
Hypothetically, if the DAA of the altcoin plummets and the whale trading indicator soars, this will be a sign of an upcoming decline.
Personally, I use this indicator to see if there will be any sales activity for the whales.Another indicator that complements the index is Exchange supply, It can be used to assess the potential selling pressure of a specific altcoin that exists on the exchange.
Disclaimer: This is not financial/investment advice.