Unlike the stock market, where retail relies on delayed quarterly earnings reports, the blockchain allows anyone to query the current state of supply, demand, profits, and losses across the network.
Must-Know On-Chain Metrics
1. MVRV Z-Score (Market Value to Realized Value): Compares the current price of Bitcoin to the average price everyone paid for their coins. Historically, when MVRV Z-Score is very high, the market is overvalued (sell). When it drops below 0, it indicates massive undervaluation (buy).
2. Long-Term Holder Supply: Tracks coins that haven't moved in over 155 days. Because long-term holders rarely panic sell, an increase in this metric means supply is becoming illiquid and constrained.
3. SOPR (Spent Output Profit Ratio): Shows if people selling today are selling at a profit or loss. Consistently selling at a loss signifies capitulation bottoms.