What is volume in crypto?

By Anycoin Direct

The word volume is familiar to everyone. But what does it really mean in the crypto world? We're going to explain that to you today in this short lesson.

Brief summary

✔️ The volume of a cryptocurrency is the total amount of that cryptocurrency traded during a given time period.

✔️ Cryptocurrency trading volumes are essential for technical analysis, price forecasting and market assessment.

What is volume in crypto?

You've probably heard someone talk about cryptocurrency had and that he said the volume was high. But what does that really mean, volume?

The volume traded of a particular cryptocurrency is simply the amount in fiat money expressed, that is, the trading volume. Speaking that the volume of Bitcoin was 10 billion euros, then 10 billion euros worth of Bitcoin was traded.

Fine, but what can you do with it?

First of all, it is nice to know where to find this trading volume. If you go to CoinGecko, you click on the coin you want to know the trading volume of and you will see the trading volume on the right side. From the very beginning Bitcoin always the largest share had.

Generally, the higher the total trading volume is, the more is going on. So by paying attention to this, you can tell if there are any big moves or possibly coming up.

In the bull market you will see that the volume is a lot higher than in a bear market. But it can also be the case that a whale (someone who has a lot of coins) makes a big buy or sell and because of this the coin you are looking at may well make a big move.

If you start keeping an eye on the volumes, at some point you will start to see patterns where large volumes force a breakout up or down. After all, the more a coin is bought, the less supply remains.

The volume of a particular currency can rise rapidly due to positive indicators and news reports that support the trend.

With a coin, you have sellers and buyers. So if there is a lot of buying, the sellers with the lowest offer will be the first to sell. Logically, sellers with higher asking prices will sell later. But when the low prices are gone you have no choice but to buy at a higher price.

Vice versa it is the same way. If high volumes are sold, sellers will sell their crypto for a lower and lower asking price, leaving sellers with an even lower asking price and thus the price will start to fall.

Volumes are displayed in charts in several places, for example at TradingView in technical analysis.

What can you use trading volume (crypto) for?

Trading volumes of cryptocurrencies are crucial in the world of crypto and can be used for a variety of purposes, including technical analysis, predicting price movements and assessing market stability. The volume of coins traded in a cryptocurrency market indicates how active and liquid the market is. It is often used in technical analysis to identify patterns and trends, and a sudden rise or fall in volume can indicate a particular movement, such as a price breakout or trend reversal.

In addition, volume can be used to determine a cryptocurrency's market share compared to other cryptocurrencies. High volume may indicate a lot of interest and trading activity, while low volume may indicate a lack of interest or slow market movements. The volume of transactions directly affects the price and liquidity of a cryptocurrency, and investors use historical volume data to try to predict future price movements. In general, a healthy market has enough volume to allow for large transactions without too much price fluctuation.

So, at least now you have an idea what volumes in cryptocurrency mean and what you can do with that information.

Test your knowledge

Question: 1/5What does volume primarily affect a cryptocurrency in one word?