For crypto traders it’s crucial to understand different crypto metrics and analyze them properly. We have already looked into the crypto market cap, now let’s see what trading volume is in crypto and what it can tell us.
What’s crypto trading volume?
Trading volume in crypto indicates the activity that is surrounding a coin. It is the number of coins that have been bought and sold during a specific period of time (usually 24 hours). Basically, volume indicates how actively people are buying and selling a certain cryptocurrency. Crypto traders consider trading volume one of the most important metrics because it shows the direction and movement of the cryptocurrency as well as a prediction of future price and its demand.
How to use it?
Volume is a highly important indicator for traders to foresee the future profitability of cryptocurrencies. For example, if a coin had quite low trading volumes suddenly its volume is really high, that could tell us about increased support and an upcoming rise in the coin’s price.
Crypto exchanges usually show the trading volumes based on the transactions on their own exchange, which is not the total trading volume of that cryptocurrency across the market. Some exchanges have been caught up in a scandal because of the incorrect display of a volume, exchanges were manipulating traders into entering a risky trade. That’s why you need to look at the total trading volume of a coin and do detailed research before making an investment.
How to analyze crypto trading volume using CoinSocialStory?
CoinSocialStory shows the total trading volume of cryptocurrencies, which is the overall volume across the entire market. You can check the trading volume of different coins on the home page. There you also can see how the volume of a cryptocurrency has fluctuated over time and analyze how the price changes or market events influenced the trading volume. By analyzing a coin’s volume over short and longer periods, you can foresee the moves it is likely to make.
If you want to compare trading volumes of two different coins, you can use our coin comparator. If you want to share the current trading volume of a coin to your social media, use the infographics tool.
To conclude, the trading volume allows you to see how popular an asset is and how often it is changing hands. Understanding and analyzing crypto trading volume is an important skill for an investor.