Four Insights About Centralized Exchanges you can Gather by Analyzing On-Chain Flow Data
When interpreted correctly, exchange flows provide some unique insights about trading patterns in centralized exchanges.
Exchange flows are one of the most popular on-chain datasets among crypto researchers and analysts. Sadly, the accuracy of many of the existing exchange flow datasets is questionable at best and certainly hard to judge. In a previous post, I explained some of the challenges of this type of analysis. Today, I would like to explore different ways in which you can interpret exchange flow data to formulate a thesis about the crypto market.
Exchange flows analysis are based on monitoring funds moving in and out of centralized exchanges by analyzing on-chain transactions. This process requires, first, associate specific addresses with exchanges and then accurately monitor the flows. Trying to do this in a manual way is highly inaccurate and un sustainable over time. At IntoTheBlock, we try to follow a machine learning first approach with some human interventions and the first wave of results seem very robust. However, looking at those charts can result overwhelming at times. So let’s explore some basic ways that might help you interpret the exchange flow indicators.
