Nansen and Bitget Analysis have launched a report analyzing on-chain metrics as predictors of crypto token costs. Key findings recommend that on-chain exercise, notably complete worth locked (TVL) and charges in Ethereum (ETH), are higher predictors of short-term worth actions than social sentiment.
The report discovered important hyperlinks between governance tokens and chain metrics for the Ethereum ecosystem and another networks. Statistical checks revealed that TVL in ETH and charges in ETH kind the very best mannequin for up to date adjustments in governance costs.
Charges (in ETH) on Ethereum + L2 Ecosystem vs ETH Value. Picture: Nansen
The research examined transaction quantity, new pockets creation, charges, and Whole Worth Locked (TVL) throughout 12 blockchains: Arbitrum, Base, Celo, Linea, Polygon, Optimism, Avalanche, Binance Good Chain (BSC), Fantom, Ronin, Solana, and Tron.
“Our collaboration with Bitget is a two-pronged strategy to token analysis. For promising early-stage tokens, Bitget focuses on neighborhood power, safety, and innovation. Their latest product launches like PoolX and Premarket have facilitated the invention of over 100 new tokens since April,” mentioned Aurelie Barthere, Analysis Analyst at Nansen.
For predicting worth returns one week prematurely, each TVL in ETH and charges in ETH confirmed significance as particular person components. Greater charges and TVL are usually related to larger subsequent returns.
Notably, the research employed Fama-MacBeth regressions to estimate danger premia related to token worth returns. It is a extensively used metric by monetary practitioners to estimate the chance premia related to fairness market returns.
Sapphire
“As for predicting worth returns, one week prematurely, ‘TVL in ETH’ is a big danger premium in a one-factor mannequin and so is the metric ‘Charges in ETH’. Each have optimistic danger premia or coefficients, that means that larger charges and better TVL are usually related to larger subsequent returns,” highlighted the analysts.
Outcomes had been extra important when testing chains individually somewhat than aggregating Ethereum and layer-2 (L2) chains.
