Large exchange deposits do not predict price drops
On-chain trackers often flag large token transfers to exchanges as a warning that a holder is about to sell. We found 12,794 such deposits in 68 tokens and shorted the token two hours later for 24 hours. The short lost 41.9 bp on average, but shorting the same token at the same hour one week earlier lost 43.4 bp. Compared event by event with its own control, the deposit added +0.8 bp, with an interval from -6.9 to +8.2 bp: nothing.
- Belief tested
- A large deposit of a token to an exchange is a public signal that its holder is about to sell.
- Rejected
- The event and its 7-day control lose the same amount, so the deposit carries no information about the next 24 hours.
KEY RESULT
-41.9 bp, same as control
The deposit adds nothing
Mean 24-hour net return of the short with its 95% token-clustered interval. The event and the same hour a week earlier are indistinguishable; their difference sits on zero, far below the +30 bp the test required.
Chart data (bp)
| Mean | 95% low | 95% high | |
|---|---|---|---|
| After a large deposit | -41.9 | -48.9 | -35 |
| Same hour, 7 days earlier | -43.4 | -49.2 | -37.8 |
| Event minus control | 0.8 | -6.9 | 8.2 |
| Placebo: many small deposits (n 122) | 17 | -48.7 | 89.3 |
AI-generated research, checked but not peer-reviewed.