In this video: we break down what is happening across the board as we head into the final trading session before Christmas.
We explore how to use order flow and on-chain data to determine whether investors are really buying or selling bitcoin. Video by Traders Reality.
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You can determine whether investors are really buying or selling Bitcoin by combining the real-time insights of order flow data (on exchanges) with the underlying behavioral evidence of on-chain data (on the blockchain).
Using Order Flow Data
Order flow analysis focuses on the real-time movement of buy and sell orders on exchanges to gauge immediate market sentiment and potential short-term price moves.
Using On-Chain Data
On-chain data provides a deeper, fundamental view of actual network activity, helping to confirm accumulation or distribution trends that might not be immediately apparent on price charts.
Combining Both
The true power lies in using these two data sources to complement each other.
-Confirmation: On-chain data can confirm short-term order flow signals. For example, large order flow buying pressure (on-exchange) combined with significant Bitcoin outflows (off-chain) strongly confirms genuine accumulation rather than just speculative trading.
-Mitigating Manipulation: Order books can sometimes be manipulated with fake large orders that are quickly canceled. On-chain data, which is immutable and reflects actual transactions on the blockchain, helps verify real demand and supply dynamics.
Tools such as Glassnode, CryptoQuant, and Nansen are popular platforms for on-chain analysis, while platforms like Bookmap or exchange-provided depth charts can be used for order flow analysis.
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