Analyze Speculative Activity with Santiment’s Exchange Metrics

    You can analyze the amount of speculative activity on the blockchain with a number Santiment metrics. Here, we’ll cover two popular exchange-based indicators:

    • Exchange Balance
    • Daily Active Deposits

    First up, Exchange Balance shows the combined values of an asset moving in and out of exchange wallets over time. Simply put, if the line is above zero for the day, it means more of a certain coin entered the exchange wallets than left, and vice versa.

    It is not uncommon for large movements of tokens to exchanges to precede rapid price decline, as the rising sell pressure proves to be too much for bulls to absorb.

    Take a look at Bancor’s (BNT) Exchange Balance below. You’ll notice that 3 of the biggest spikes in Bancor’s recent exchange flows came shortly before major corrections:

    In a similar vein, Daily Active Deposits counts the total amount of ‘deposit’ addresses interacting with the observed coin.

    Owned by exchanges, ‘deposits’ are interim addresses that all coins pass through before they hit the main exchange wallets.

    Spikes in daily deposits - especially during price increase - are a clear sign of rising speculative interest, and can often signal a looming trend reversal as the crowd (and whales) look to offload their bags.

    A clear example can be found RLC’s recent Daily Deposits, whose spikes correlated squarely with several interim and long-term tops:

    As you can see, these two metrics can be a great proxy for speculative activity on the network, and can reveal major turning points in holder behavior and signal crucial ‘offloading’ events.