The Deception Of Transparency – The Downside Of On-Chain Analysis
A Greater Level Of Insight
Crypto indeed has a significantly higher level of transparency than any other financial market. On-chain analysis together with AI-enabled software provides a plethora of valuable and helpful data. Being able to track, understand, and even predict future events with a certain degree of certainty is incredibly valuable to every market participant. The sad truth, however, is that very few investors choose to harness the incredible power of on-chain analysis.
Outside of “whale alerts”, very few investors delve into the fascinating world of on-chain analysis. Of course, data can be interpreted in multiple ways, and this is where those utilizing on-chain metrics must be incredibly careful. This is something that I have previously touched on, regarding whale wallets and spoofing. It’s commonly known that whale transfers to exchanges are interpreted as a bearish indicator.
Why else would a whale wallet send coins to an exchange? The obvious answer is to sell them for USDT, or perhaps some other asset, right? However, there is also the possibility that market manipulation is the primary objective. If a whale sends an enormous amount of coins to an exchange simply to trick the market, he can simply withdraw them again without selling, ultimately creating a false signal.
Manipulation Hits A Whole New Level
With on-chain metrics becoming more and more advanced, the observation and study of particular wallets is now very much an integral part of many investment strategies. Altcoin investors have begun monitoring the wallet addresses of very influential YouTubers and other social media influencers. Essentially, investors are endeavoring to discover what and when these investors are investing in.
Unfortunately, transparency is a two-edged sword. Many opportunists have now taken to sending random amounts of unknown tokens to influential wallet addresses, in an attempt to make it appear as if these wallet owners have now purchased these tokens. You can imagine what generally tends to happen. Yep, the masses ape in, and these slicksters create a type of self-fulfilling prophecy.
They in turn, simply dump on these naive investors, and of course, a complete collapse is the obvious outcome. This is simply another example pointing towards the importance of confluence. Fundamentals and technicals need to be accompanied by emotional intelligence. Many new investors underestimate just how important emotional intelligence is in this game. It can seriously enhance your efficiency.
A combination of technical analysis, fundamentals, as well as emotional intelligence is a powerful package. Any trader or investor who becomes skilled in all three areas has an enormous edge over 90% of the market. Essentially, this should be your aim… to be in the top 10%… and to consistently outperform every single benchmark.
Final Thoughts
It’s better to aim too high than too low. A well-rounded and experienced approach is your best bet at being able to accurately interpret this market, and hopefully, see through much of the spoofing and other manipulative behavior that takes place in the Crypto market, as well as every other market. It’s a tough terrain, and you have to be prepared! I have a few new gem picks coming up next week. I am looking forward to getting those out soon. Until next time, keep stacking those sats!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
