Entity Clustering

Entity clustering is the broader process of aggregating data points into logical entities to simplify the analysis of large-scale network data. In crypto, this means moving beyond individual addresses to understand the behavior of exchanges, mining pools, decentralized protocols, and whales.

By applying clustering algorithms, analysts can distinguish between automated bot traffic, institutional custody solutions, and retail users. This categorization is essential for understanding market microstructure, assessing liquidity depth, and evaluating the impact of large transactions on price discovery.

It turns raw, disconnected addresses into meaningful market actors that can be studied for behavioral patterns.