What are exchange inflows and outflows in crypto?

Exchange inflows and outflows measure how much crypto moves into and out of exchange wallets, as seen on the public blockchain. An inflow usually means someone deposited coins on an exchange, and an outflow means coins were withdrawn to another address. The figures are one of the main tools in on-chain analysis.

They are not the same as ETF flows. Crypto ETF inflows and outflows count fund shares created and redeemed, while exchange flows count coins moving across a blockchain.

What is crypto exchange netflow?

Netflow is the difference between the two. If 10,000 coins arrive at exchange addresses in a day and 12,000 leave, netflow is minus 2,000. A positive figure means more coins arrived than left.

Data firms build these numbers by first labeling which addresses belong to exchanges. Glassnode says it uses addresses the exchanges disclose, public tags that pass quality checks, and clustering methods that group addresses likely to share an owner. Every deposit to and withdrawal from those addresses then counts as a flow.

What are bitcoin exchange reserves?

Exchange reserves are the running total, meaning the coins held across all known exchange addresses. CryptoQuant defines the reserve as the total amount of coins held in exchange addresses. Inflows add to it and outflows subtract from it.

Glassnode warns that its exchange balances are best treated as lower bounds, because it filters out uncertain addresses and may miss some holdings. Coverage also depends on disclosure. Glassnode notes that Binance publishes verified addresses monthly, while Coinbase and Kraken do not.

What do exchange outflows mean?

CryptoQuant's guide says analysts usually read rising outflows as a bullish sign, on the idea that coins are leaving to be held in private wallets. Rising inflows are read as bearish, since coins are often sent to an exchange to be sold. Large reserves are taken as a sign of more potential selling pressure. These are conventions, not rules, and they say nothing certain about future prices.

Outflows can also signal stress. In November 2022, Arkham Intelligence data showed FTX's crypto balance falling from about $8.4 billion on November 5 to $1.1 billion by November 10, an 87% drop, as customers rushed to withdraw, CoinDesk reported. That was a run on the exchange, not long-term saving. What followed is covered in what happened to FTX.

How should you read an exchange inflow chart?

With caution. Both CryptoQuant and Glassnode say exchanges move coins between their own wallets, which can look like a large inflow or outflow when nothing changed hands. Glassnode advises treating sudden large spikes as preliminary, because past figures can be revised when new addresses are identified or relabeled. New or unlabeled addresses also take time to correct.

Glassnode's exchange data covers only the Bitcoin and Ethereum assets it supports, so flows on other chains may not appear. A single whale moving funds can also dominate a day's numbers. For these reasons, flow charts are usually read alongside other data rather than on their own.