What is Volume?
The volume of a cryptocurrency can indicate the direction and movement of the cryptocurrency as well as the demand for this currency and its future price. Volume means that a certain number of tokens or contracts are traded at a specific time (for example, 24 hours). General trading volume is the data collected from all exchanges. Volume Analysis data can give us important information such as:
- price movements
- the future price of that currency and so on
Also, the higher the volume of cryptocurrency transactions, the more liquidity will be experienced in the cryptocurrency market.
Ways To Look At Trading Volume
One of the best and easiest ways is to focus on a specific cryptocurrency in an exchange such as Coinbase, where volume is measured based on transactions over a 24-hour period. You can also check the general trading volume, which is calculated using data from all Exchanges. But these alone do not represent the volume of a cryptocurrency because a large volume of transactions in this currency can be traded in private Counter (OTC) market transactions.
For example, if we assume that the price of Bitcoin will increase from $ 46,000 to $ 50,000 and show hefty volume, it means that investors are making moves and the price will probably go up. But if the price of Bitcoin reaches $ 40,000, but there’s a minimum volume, it indicates that few investors support this trend, and we will probably see a decrease in price.
price increase with low volume
When you come across a cryptocurrency that has a sharp price increase with low volume, this is a trap. A sharp price drop is likely on the way, and the low volume indicates the low interest of investors in this cryptocurrency. Also, High volume is typically converted to liquidity and stability. But nothing in the world of cryptocurrencies is unlikely, and perhaps this cryptocurrency will prove itself in the market.
Some Exchanges change the volume to attract customers and investors. This change is done by a robot that increases the number of transactions. The result is to attract new investors and increase the volume of the exchange.
Volume & Cryptocurrency Tracking
Since many Exchanges in the world of cryptocurrencies are located in specific regions such as Asia, Europe, and the Americas, tracking volume by exchange can well become a valuable tool. This tool can be used to identify where the action is centered for a given currency.
With Tradingview, you have a great program and indicator package for volume analysis. In this program, the most important volume indicators are shown and it is a very good application for volume analysis.
Currencies with the highest volume
If you go to CoinMarketCap and sort the cryptocurrencies by volume, you will see that in terms of volume (24h) :
- Bitcoin Cash
As you can see, volume is one of the best ways to look at cryptocurrencies and analyze their performance in the market. Using volume, you can get useful information from a cryptocurrency and be aware of its future to some extent.