What Is Entity-Adjusted Volume?
Entity-adjusted volume filters raw on-chain transaction volume to remove internal transfers (a user sending coins between their own wallets) and change outputs (the UTXO-based "change" returned to the sender). The result measures genuine economic activity between distinct entities rather than inflated raw volume.
How Entity-Adjusted Volume Works
Raw on-chain volume can be misleading because it includes: exchange wallet reorganizations, change outputs from UTXO transactions, consolidation transactions, and internal transfers. Entity-adjusted volume uses clustering algorithms to group addresses belonging to the same entity, then only counts inter-entity transfers.
Why It Matters for Traders
Entity-adjusted volume is the correct input for metrics like NVT Ratio and transfer velocity. Using raw volume overestimates economic activity and undervalues the network. When entity-adjusted volume diverges from price (e.g., rising volume during a price decline), it signals genuine economic activity that contradicts the bearish price action — a potential accumulation signal.
