Exchange In/Outflow & Netflow
Exchange inflow is defined as an amount of coin deposited into the exchange wallets and exchange outflow is defined as an amount of coin withdrawal from the exchange wallets.

Definition

Exchange Inflow is defined as an amount of coin deposited into the exchange wallets.
Metrics
Description
Inflow Total
The total amount of BTC transferred to the exchange.
Inflow Mean
The mean amount of BTC per transaction sent to the exchange.
Inflow Top10
The total BTC amount of the top 10 transactions inflow to the exchange.
Inflow Mean(MA7)
The 7 days moving average of mean BTC inflow to the exchange.
Exchange Outflow is defined as an amount of coin withdrawal from the exchange wallets
Metrics
Description
Outflow Total
The total amount of BTC transferred from the exchange.
Outflow Mean
The mean amount of BTC per transaction sent from the exchange.
Outflow Top10
The total BTC amount of the top 10 transactions outflow from the exchange.
Outflow Mean(MA7)
The 7 days moving average of mean BTC outflow from the exchange.
Exchange Netflow is the difference between BTC flowing into and out of the exchange. (Inflow - Outflow = Netflow)
The mean value is the In/Outflow Total divided by the Transactions Count In/Outflow.

Interpretation

Indicating Selling or Buying Pressure

An increase of inflow to exchanges possibly means dumping from individual wallets (including whales), indicating selling pressure. On the other hand, an increase of outflow from exchanges possibly means an increase of HODL positions of traders in order to store coins in their own wallets, indicating buying pressure.
Trading strategies based on this interpretation have to be responsive to signals since the execution in exchanges after the coin movements is relatively fast. That is why you need a block-level window provided in CryptoQuant Data API.

Indicating the Level of Exchange Activity

A positive trend of inflow or outflow to exchanges can indicate an increase in overall exchange activity, meaning more and more users actively use the exchange for trading. This possibly means that the sentiment of traders is in the bullish moment. According to this interpretation, the other way around means bearish sentiment.

Predicting Volatility

BTC In/Outflow Mean(MA7) explain the strength of previous volatility in price, which possibly means the current position might be local tops or bottoms. This is because the large portion of inflows is based on transactions among exchanges, where the analysis is done by the CryptoQuant research team, and this phenomenon can be explained by the results of arbitrage strategies.

Use Case

Predicting Market Trend (Bullish or Bearish)

Based on the "Exchange Activity" interpretation, we can see the trend of inflow to all exchanges and outflow from all exchanges by applying a moving average to data, which is one of the well-known technical indicators for having data's historical trend. We also apply multiple moving averages to see exact inflection points, called moving average ribbon.
As you can see below, both inflow and outflow trends roughly well-explain bullish or bearish sentiments for the past 3 years where a meaningful number of exchanges have been activated, which supports "Exchange Activity" interpretation.

Predicting volatility with BTC In/Outflow Mean(MA7)

By looking at BTC Inflow Mean(MA7)'s degree of where local tops are located, we can estimate how much the current location is a local top (in red circle) or bottom (in green circle). If your BTC Inflow Mean(MA7) value is in a similar position, you need to check other complementary indicators telling you selling or buying pressure to determine the current price position is in the local top or bottom.
By looking at BTC Outflow Mean(MA7)'s degree of where local tops are located, we can estimate how much the current location is a local top (in red circle) or bottom (in green circle). If your BTC Outflow Mean(MA7) value is in a similar position, you need to check other complementary indicators telling you selling or buying pressure to determine the current price position is in the local top or bottom.

Link to Our Data

Last modified 3mo ago