The importance of monitoring crypto exchange transactions

Updated 6 months ago by CoinFi

When investors purchase crypto from an exchange such as Binance or Huobi, they often move the purchased coins into a personal wallet with the intention to hold. Conversely, when investors intend to sell, they move the crypto asset back into an exchange. These are very common transactions. In fact, as much as 60% of all ETH transacted on the Ethereum blockchain historically involved a crypto exchange.

Since all Ethereum blockchain transactions are public, we hypothesized that if we could detect Ethereum blockchain transactions moving in or out of exchanges, we could predict the price movements of ETH and ERC-20 tokens.

That’s exactly what CoinFi did.

First, CoinFi partnered with Google to monitor all Ethereum transactions in real-time. Next, we deployed machine learning techniques and blockchain experts to find exchange wallets addresses such as Binance wallets that hold deposits.

With real-time transaction monitoring technology and proprietary data on exchange wallet addresses in place, our in-house data scientists are able to use advanced backtesting techniques to find correlations between exchange activities and price movements of coins.

These investments in technology, data, testing form the basis for many of our trading signals such as abnormal amount of ETH moving in or out of exchanges and high amount of tokens moving into exchanges.

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