From an investment perspective, major participants in blockchain can be classified into three types: exchange, miner, and whale. An exchange is where the actual trading events occur, which reflects the demand side. A miner controls supply on the blockchain by mining blocks. A whale makes and exploits market inefficiency by controlling both demand and supply.
To exploit market inefficiency caused by the entities as a trader, we need to see their behaviors. Flow data is CryptoQuant's unique data that summarizes their behaviors. Compared to network data, flow data is more granular (micro) data that can explain detailed activities that occurred on the blockchain. By understanding how the entities behave in the blockchain, we may build unique trading strategies against normal traders. We briefly describe each type of entity on why those types are important in the following sections.
An exchange is where the actual trading events occur, which reflects the demand side. The market price is formed as a result of trading activities, where the price is consensus in the market. The metrics based on exchange entities such as inflow or outflow can be a big sign of major trading activities which can be a risk handler for smart traders. We define an exchange in our metrics as all participants in the exchange including users (traders).
A miner controls supply on the blockchain by mining blocks. If mining pools shut down their mining activities for some reason, the network cannot be maintained. As mining pools to make profits as much as they can, normally there is a timing gap between mining and monetization. By observing their behaviors via metrics such as miner outflows, traders can find unique signals to make profits. We define a miner in our metrics as all participants in the mining pool including individual miners.
A whale makes and exploits market inefficiency by controlling both demand and supply. Whales are traditionally important entities even in stock markets since they have the power to swing and move markets. Exploiting their patterns with CQ's metrics would be helpful to avoid risks.
CryptoQuant analyzes every single transaction on the Bitcoin and Ethereum blockchain networks.
Blockchain can offer great potential, but it has its vulnerabilities rising as well. Among different data you can observe, market data is being cultivated and manipulated as the market is getting bigger by the day. Thus, the importance of on-chain data is growing bigger and bigger.
We keep track of every single transaction that occurs in the market, label addresses through dusting and machine learning-based clustering, identify entities whether it's an exchange or a mining pool, etc.
Outputs of our analysis can be one of the followings: 1) network data that relates to blockchain network itself such as active address count, 2) market data related to price data evoked by cryptocurrency exchanges, 3) entity flow data that summarize money flow movement among the most important players in the network such as exchanges and miners.
To be more specific about our entity flow data, CryptoQuant currently tracks on-chain flow metrics for Bitcoin (BTC), Ethereum (ETH), Stablecoins, and Altcoins. For example, knowledge of exchange addresses allows us to determine the supply held by exchanges and to calculate on-chain flows—i.e., the transfer of native units—into or out of addresses associated with exchanges. Measuring flows and supply held is an imperfect science so caution must be applied in their application to trading or other uses cases, particularly in the early periods of their release. (note 1)
We provide real-time charts and raw entity data by following the steps below.
Collect labeled addresses by preceding thorough and vast amount of dusting process
Serve our data efficiently and securely
Ensure that we have valid labeled addresses based on reserve analysis, trend analysis, graph analysis, and data statistic analysis.
Data provided by CryptoQuant is trusted and used by top media such as Cointelegraph, Coindesk, Forbes, and Bloomberg.
We've also helped solve money-laundering cases in Korea with these address label data, closely working with Korean Police Agency and Prosecution Service. The Korean government supports us to spend a million USD to investigate wallets since 2019.
note: As you may already know, new exchange wallets are constantly being made so periodic update of entity data is needed. To meet the needs of both quants who want to use a fixed data and researchers/traders who want to analyze updated data, we provide two branches.
stable is created once every 1 month. It duplicates the current branch clustering of the time of the update and maintains the data for the next 1 month.
dynamic is updated every week with the most recent clustering algorithm. Each branch is usually updated on Tuesday.
stable branch will be updated on the 1st Tuesday of every month.
If you’re looking for fixed data, you can use the
stable branch and if you want to check out new data every week, you can use the
dynamic branch. Since the Stable branch is updated after 1 month(max) even if the new cold wallet is found, a huge outlier might occur.
The charts provided by the CryptoQuant Website use
For more information on our data, the following technical documents would be helpful.