What is The Volume in Cryptocurrency? Just a Number or Key Technical Indicator?
The CryptoCurrency market continues to soar in popularity as more and more people jump to invest in cryptocurrencies and multiply their money. As the number of investors rises, so do the doubts regarding various terms associated with the CryptoCurrency market. One of the most commonly asked questions that people search for is – what is the volume in cryptocurrency? If you are wondering about the definition of CryptoCurrency volume, we urge you to read this article for complete information.
What does volume mean on a cryptocurrency exchange?
The Crypto market represents similar volatility as the traditional stock market, even surpassing it sometimes. Therefore correctly predicting the movement of cryptocurrencies is essential to make a profitable position and multiply the investment. Various technical indicators are employed to ascertain the trends of the prices. Volume represents one of the most important technical indicators for technical market analysis.
The volume of the CryptoCurrency represents how much a particular coin is traded over a given period on an exchange. Understand it this way – assume a scenario where a particular coin is not traded a single time. In this case, the volume of that coin will be zero. If it exchanges hands twice, the volume will be two times the value of that coin and so on.
In other words, the volume represents the strength of a CryptoCurrency and therefore also denotes the popularity of a given coin. The higher the volume, the more transactions are carried out, representing a general interest in the given CryptoCurrency.
On a histogram, volume is denoted with green and red vertical bars. The height of the bar represents the extent of the volume. Green bar represents higher trading and a rise in the price, while the red bar indicates a fall in trading and a decline in price.
Why is the volume of cryptocurrencies so important?
Volume in a CryptoCurrency is a critical indicator that certainly facilitates decision-making while investing in a particular coin. Moreover, the volume represents the interest and intensity of market trends. The correct analysis of volumes offers valuable insight into the price movements and the source of price changes.
Cryptocurrency trading volume is an essential tool used extensively by veteran investors. Therefore it denotes a valuable factor in predicting the market trends and helping investors decide to enter or exit the market. If you are serious about crypto trading, you must learn to decipher the data represented by the volume so that your investment has a higher chance of giving a huge return.