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It does make sense if you look at how change addresses work with Bitcoin. Best-practice is to generate a new address for the 'change' from each transaction. S
by aeternus 8y ago
It does make sense if you look at how change addresses work with Bitcoin. Best-practice is to generate a new address for the 'change' from each transaction.
Suppose an exchange has a hot wallet with 10btc. Each time a user requests a withdrawal, say 0.01 BTC, the exchange generates a txn that sends 0.01 to the user, and the remaining 9.99 btc to a newly generated hot wallet address. On the blockchain, we can't tell if that was a transaction for 9.99 btc or 0.01 btc and most of these 'analysis' services are considering both to be volume.
This amplifies apparent volume even if no one is doing anything questionable.
To use the AAPL example, this type of blockchain volume analysis is like adding each trader's private brokerage account value to the total AAPL trade volume each time they buy/sell a share.