On-chain data includes exchange inflows and outflows, whale wallet movements, active addresses, and long-term holder behavior. Analysts use it as a fundamental layer for crypto, since there are no earnings to read.
It is transparent but noisy: a large transfer to an exchange might be a sale or an internal reshuffle.
Example: on-chain data shows 40,000 BTC moved to exchange wallets in a week, the most in months. That is often read as potential selling pressure, but it is a hypothesis, not a fact.