Several metrics and indicators are relied upon for assessing how
Several metrics and indicators are relied upon for assessing how specific cryptocurrencies or the entire market as a whole are performing. We have already discussed what market cap is in cryptocurrency and why it is important. Today we are here to answer the question: “what does crypto volume mean?”
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Crypto volume is one of the most commonly used and accurate metrics for evaluating how cryptocurrencies have been doing over a certain period and how they are likely to perform in the coming days.
Considering it is a rather significant indicator, we will be looking at why it is so important for the crypto market, besides simply defining what crypto volume is.
What is Crypto Volume?
Used in conjunction with other metrics such as market cap and circulating supply, volume is a crucial indicator of crypto health. The volume of a certain cryptocurrency- be it a coin or a token, refers to a fairly simple number: the amount of that coin/token that has been traded over the past 24 hours.
This means that if you wanted to calculate the volume of the Bitcoin cryptocurrency, you would have to find out how many units of this crypto had changed hands in the 24 hours gone by immediately before.
Bitcoin volume helps us understand how many people in the market are actively engaging in buying and selling of Bitcoins in the given period.
Similarly, you can find out that value for any cryptocurrency you want using statistics from data aggregation sites like Coinmarketcap. The time period for the volume can be adjusted to have a look at trading volumes over a day, a week, a month etc.
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At the time of writing, the total 24 hour volume of the crypto market (according to Coinmarketcap) is $31,706,356,573 and that of Bitcoin is $9.84 billion. This means that $9.84 billion worth of Bitcoins have been bought and sold in the past 24 hours.
Why is Crypto Volume Important?
Looking at crypto volume helps us understand how many people are buying and selling Bitcoins and who are all are backing the ongoing price trends. This, in turn, will help us assess how the market ramifications will work in the short run.
Volume also helps traders zero in on the direction and movements of a certain cryptocurrency.
Evaluating the volume statistics for a coin can be done over any given period, and this can reveal trends in the coin’s movement over the short and long term. It will simply help us understand whether the cryptocurrency is behaving as it usually does or is experiencing a change in pattern.
Just looking at price or market cap is hardly enough to ascertain whether a move will be sustained. To make sure of that, crypto volume is a great metric to go with.
This is why, a large number of cryptocurrency traders choose to go with it. Therefore, in addition to following our must read Bitcoin trading tips, you must also keep an eye on the trading volume.
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