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Indicator 2 for buying low and selling high: Inflow and outflow situation of Cex.

日月小楚

2023-06-05 11:06

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Source: Riyue Xiaochu

When a large amount of a token flows into a centralized exchange, it is likely a sell-off behavior, and the opposite is true for withdrawals. Many times, this has tremendous power, and the logic and principles behind it may seem simple, but it is important to note:

1) This data needs to be combined with the overall market environment and the rise and fall of the currency. If you only see a large inflow of funds and think it will fall, the error rate is relatively high.

2) The use in specific situations has a significant impact. For example, if a certain coin has already experienced a high increase in price and the market is experiencing a high level of FOMO sentiment, but there is a sustained large inflow of funds into the exchange, then the probability of a market top is very high.

3) Be wary of when the main force intentionally releases smoke bombs. For example, if a coin has already fallen significantly and is oscillating at the bottom, when a large amount of funds flows into the exchange, it may be the manipulators entering the exchange in advance before pushing up the price.

If you want to use this indicator, the proportion of trading volume on CEX is a prerequisite. If a coin's trading is all on-chain, then the data from centralized exchanges is meaningless. Generally speaking,

1) Newer coins often have a higher proportion of trades on decentralized exchanges (DEX).

2) After listing on Binance, the trading volume is mainly dominated by Binance.

3) In case of uncertainty, you can check the trading ratio on coinmarketcap.

For example, PEPE was mainly traded on Uniswap before being listed on Binance. However, after being listed on Binance, it became mainly traded on Binance.

4) Even without Binance, one should be cautious of some second-tier exchanges that use bots to inflate trading volume, resulting in artificially high market share.

2、Case Study

2.1 ssv

Sorry, I cannot translate the given content as it is not in Chinese language. Please provide the content in Chinese language for me to translate.

1) A large number of withdrawals from exchanges caused the corresponding coin prices to hit bottom. After a period of oscillation, this triggered a surge in prices.

2) The exchange received a large number of deposits, causing the price of SSV to drop from $21 to $16.

3) The exchange has received a large number of deposits, and the price of SSV33 has been adjusted from 33 dollars to 27 dollars.

4) A large number of deposits were made to the exchange, and the currency price began to fall all the way.

Why is only the red box 2 adjusted, so it needs to be combined with the overall environment. At that time, BTC started an upward trend, and all the altcoins were taking turns to skyrocket. Then LSD became a popular track.

And the red box 3 has already reached the top area, and the increase is relatively large. To be honest, it was impossible to determine at that time. SSV did not flow into the exchange in large quantities at the highest point, indicating that the manipulators did not rush in at the highest point (because this would undoubtedly inform the market), but after experiencing a large amount of recharge in 2) 3), it obviously entered the top area.

If you haven't sold at the top, then it's definitely time to exit around $4-40 in the red box. This is because there has been a large influx of trades into the exchange once again, and the Shanghai upgrade is imminent, which will soon realize the benefits. At that time, other altcoins were also falling.

2.2 magic

The situation of Magic entering the exchange, including the red boxes 1, 3, and 4, led to a drop in the green coin price.

Red box 2 is a special case for unlocking a large amount of magic at once. At that time, the overall market was doing well and many altcoins were skyrocketing. However, Magic did not experience a significant increase in value, so there was no major drop in price during this time.

2.3 PEPE

Above is the inflow and outflow situation of the Watechers exchange, where green represents inflow and the green bars are higher than the red bars, indicating net inflow.

PEPE's peak signal is also very obvious, reaching its highest point on May 6th. In the days leading up to that, there were mostly net inflows. And in the following days, there were mostly net inflows as well. Therefore, it can be judged that PEPE's coin price has peaked and is not a deep adjustment. The coin price has since been falling all the way.

2.4 STG

It was discovered that the token balance of Binance 14 was continuously bought during the decline of STG on the exchange, as the balance of STG on the exchange was also declining. On December 17th, the STG balance in the Binance wallet reached its lowest point, and the price of STG was also at a local low. After a few days of adjustment, the price began to rise.

3、Data Source

Finally, I would like to recommend several websites where you can check the inflow and outflow of exchanges.

1、watchers

https://watchers.pro/user/referral?referralcode=fLjhuIHL

View the inflow and outflow of a certain coin. The free version can be used. After logging in with your wallet and verifying your Twitter account, you can get a 14-day premium version. It is recommended that everyone try other features.

2、glassnode

glassnode.com must be a paid member. And most of the tokens are old coins. It is recommended that newcomers do not pay to use it, but those who are already members can use it.

3. Blockchain Browser

https://blockscan.com/

The advantage is that it is supported by various public chains and is free of charge.

The disadvantage is that it can only view individual addresses one by one (such as Binance's wallet 14, etc.).

4、Jiedata

https://jiedata.com/

Jiedata is a tool that looks at inflows and outflows from the perspective of exchanges and can be used to set up alarm alerts. Currently, Jiedata is in the free phase.