How do you choose a coin to invest in? What are the factors to pay attention to when buying and selling cryptocurrencies? These questions are the first ones that arise in people’s minds when they start considering crypto trading as a way to make money.
In today’s article, we will discuss one of the most essential indicators for all crypto investors – volume or trading volume. Read on to find out what is volume in cryptocurrency, why it matters, and where one can check it.
A trading volume is the number of times an asset changes hands within a given time. This indicator is especially crucial in crypto trading and for future price predictions. If buyers and sellers trade a certain coin back and forth, it means that this particular cryptocurrency has high volume and is in high demand.
Volume is measured in fiat currencies or coins to show how much was sold or bought. The most often used timeframe for tracking this indicator is 24 hours. For example, if the BTC trading volume is approximately $32,866,120,147, one can interpret it in the following way. Buyers and sellers traded Bitcoin for this amount during the last day.
Even though volume is considered to be a vitally important indicator, the volatility of the crypto market makes it almost impossible to make any price predictions based on the volume only. Some coins are in high demand right after they are introduced but this hype does not last for long. A few months after, the same cryptocurrencies may fade away and no one will be talking about them anymore. Volume here depicts the whole situation – at first, it’s rising like crazy but decreases with time.
Volume is not necessarily used only in the crypto industry. This indicator is also applied in the stock market, for instance. No matter what’s the asset, its popularity among sellers and buyers can tell a lot about whether it’s worth investing in it or not.
Volume is one of the fundamental indicators for market analysis and price prediction. With the help of volume, one can clearly see the market sentiment and try to foresee the price movement of a specific coin. However, don’t forget that the crypto market is highly volatile, which, unsurprisingly, has a huge impact on coins’ volume.
It can happen that one day a digital asset has a high volume and is of interest to the majority of market participants, including large investors. At the same time, as soon as something happens, this asset becomes unpopular and the volume goes down.
Volume can be used as an indicator not only for cryptocurrency but also to check how reliable exchange is. If the platform has a low volume of trading even the most popular coins, it probably means that there’s not much going on on this platform. Therefore, if an investor wants to set up orders, they might not be executed in the nearest time.
Last but not least, volume is in direct correlation with the coin’s value. If the volume goes up, it means that there are more orders with this particular cryptocurrency. It is requested by both sellers and buyers and will continue rising in price, at least, in the nearest future.
On the contrary, if the volume goes down, the asset is probably not interesting for the market participants anymore. Consequently, it might be risky to invest in it as no one shows interest in it and will probably not invest money in it.
To put it simply, volume is just one of the numerous indicators used in cryptocurrency technical analysis. Technical analysis is a combination of different mathematical indicators that are used with available cryptocurrency pricing data. Technical analysis is performed as an attempt to predict future market trends based on past price movements.
Along with trading volume, technical analysis encompasses candlestick charts, support and resistance levels, cup and handle patterns, etc. Unlike volume, technical analysis gives a larger picture and broader understanding of what’s going on in the market, as a whole. Volume is just a small but essential piece in this picture.
Even though volume and technical analysis are at two totally different levels, it does not mean that volume is less important or insignificant. Conversely, trading volume is an indicator that can be found on any exchange platform. Technical analysis, undoubtedly, is more difficult and even more challenging to conduct. Volume is something that even a crypto beginner can understand and pay attention to when making their investment decisions.
Also known as trading volume, it's an indicator of how many times a particular cryptocurrency was traded over a given timeframe. It includes both buy and sell offers. The most common period for tracking volume in crypto is 24 hours, but it can also be significantly longer. If some coin has a large volume (measures in fiat currencies) it means that it is popular on the market and worth investing into. Traders of all levels check the trading volume of the cryptocurrencies they want to buy or sell to make sure that they will gain profit. It can be easily tracked on big exchange platforms along with other indicators such as market cap, circulating supply, etc.
The most popular and valuable coins are the ones that are the most often traded. It's a sign that a particular cryptocurrency is in high demand. In its turn, for the investors, it means that no matter whether they buy or sell large-volume coins, they will make some money on it. Currently, the most popular coins with the highest cryptocurrency volume are Bitcoin($33,371,456,338 for the past 24 hours) and Ethereum ($17,211,223,924) accordingly.
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