Coins moving onto exchanges are usually being prepared for sale; coins moving off are usually going into storage. Aggregated exchange balances therefore act as a slow-moving supply gauge you can read directly from the chain. When reserves are draining hard while the market prices continue to lean bearish, that disagreement is the trade. It works best on multi-day and monthly markets, since the signal is measured in days, not minutes.
Markets on Polymarket where exchange reserve & netflow divergence is the natural play:
