Unit 1 · Level 3 · Exchange & stablecoin flows
Inflow spikes
A sudden spike of coins flowing INTO exchanges is the classic sell-pressure alarm: someone just staged inventory next to the sell button. Sometimes it is exactly that: before several big drawdowns, dormant whale wallets deposited thousands of BTC. But the alarm also rings falsely: exchanges shuffle coins between their own wallets, traders deposit collateral for derivatives, and custodians rebalance. Your job is to tell the difference before panicking.
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What you get asked
Why is a large exchange inflow read as potential sell pressure?
Nobody deposits for fun. Moving coins onto a venue where they can be sold is a revealed intention: not a guarantee, but a lean.
Put the careful analyst's checklist for an inflow spike in order
Most scary-looking inflows die at step two or three. Exchange wallet reshuffles and custody migrations produce huge 'inflows' with zero sell intent.
In 2024, Mt. Gox trustee wallets moved billions in BTC for creditor repayments, as exchange restructurings have done too. What's the lesson?
Bankruptcy estates, custody migrations and wallet upgrades all move mountains of coins. Headlines scream 'whale alert'; the honest analyst asks 'whose wallet, and why?'
A trader depositing BTC to use as ___ for a futures position creates an exchange inflow with no intention to sell the coins.
Derivatives traders park coins on exchanges as margin. The coins arrived and the alarm rang, but they're backing a position, not queuing for sale.
The most honest way to use exchange inflow data is as…
Inflows shift probabilities, not certainties. Treat the spike as a question ('who, why, how broad?') and you'll dodge both the panic and the trap. 🐜
The rest of this unit
Follow the money on and off exchanges. Where coins sit tells you what holders plan.