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 whole worth locked (TVL) and charges in Ethereum (ETH), are higher predictors of short-term worth actions than social sentiment.
The report discovered vital hyperlinks between governance tokens and chain metrics for the Ethereum ecosystem and another networks. Statistical exams revealed that TVL in ETH and charges in ETH kind the most effective mannequin for modern modifications in governance costs.
Charges (in ETH) on Ethereum + L2 Ecosystem vs ETH Value. Picture: Nansen
The examine examined transaction quantity, new pockets creation, charges, and Complete Worth Locked (TVL) throughout 12 blockchains: Arbitrum, Base, Celo, Linea, Polygon, Optimism, Avalanche, Binance Sensible 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 group power, safety, and innovation. Their latest product launches like PoolX and Premarket have facilitated the invention of over 100 new tokens since April,” stated Aurelie Barthere, Analysis Analyst at Nansen.
For predicting worth returns one week upfront, each TVL in ETH and charges in ETH confirmed significance as particular person elements. Increased charges and TVL are usually related to larger subsequent returns.
Notably, the examine employed Fama-MacBeth regressions to estimate threat 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.
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“As for predicting worth returns, one week upfront, ‘TVL in ETH’ is a big threat premium in a one-factor mannequin and so is the metric ‘Charges in ETH’. Each have optimistic threat premia or coefficients, which means that larger charges and better TVL are usually related to larger subsequent returns,” highlighted the analysts.
Outcomes have been extra vital when testing chains individually somewhat than aggregating Ethereum and layer-2 (L2) chains.