Trade Volume

Understanding Trade Volume

In simpler terms, if you imagine a busy market place, trade volume is the total amount of goods that have been bought and sold in a single day. In cryptocurrency, instead of physical goods, we are referring to digital coins or tokens. A high trade volume usually means that the cryptocurrency is highly popular amongst traders and has a good degree of liquidity.

Why Trade Volume Matters

• Market Liquidity: A cryptocurrency with high trade volume often signifies a liquid market. This means there are many traders buying and selling, which can make it easier to enter or exit positions without drastically impacting the price.
• Investor Interest: High trade volume can also indicate investor interest in a particular cryptocurrency. If a lot of people are trading a certain cryptocurrency, it's likely that the crypto asset has attracted the interest of the investing public.
• Price Volatility: Trade volume can influence price volatility. A high volume of trades can lead to price swings—both increases and decreases. On the other hand, lower trade volumes could indicate a more stable, but less liquid, market.

How to Measure Trade Volume

Trade volume is usually measured over a 24-hour period and can be found on any cryptocurrency exchange. Most trading platforms will display the trade volume for each individual cryptocurrency pair (e.g., Bitcoin to US Dollar) as well as the total trade volume across all pairs.