Token Outflows

Definition ∞ Token outflows refer to the movement of digital tokens from a specific address, wallet, or exchange to another external destination. These movements can indicate various activities, including investors selling assets, transferring funds to cold storage for security, or moving tokens to different platforms for yield farming or trading. Significant token outflows from exchanges, for example, often suggest a reduction in immediate selling pressure and a potential shift towards long-term holding. Analyzing these flows provides insight into market sentiment and capital allocation.
Context ∞ Tracking token outflows is a common on-chain metric used by analysts and investors to gauge market sentiment and predict potential price movements, frequently featured in cryptocurrency news and market analysis. Large outflows from centralized exchanges, particularly for Bitcoin or Ethereum, are often interpreted as a bullish signal, suggesting accumulation by long-term holders. Conversely, sustained inflows can indicate increased selling pressure.