Along with circulating supply and market capitalization, volume is one of the most prominent metrics in crypto. This article will focus on the trading volume of cryptocurrencies.

At the end of this article you will learn:

1. What volume is
2. how it can be used as a coin’s direction

First, let’s define volume.

In general, volume is the amount or quantity of something. In cryptocurrency term, volume is the total amount of coins traded around in a certain amount of time. If you look at CoinMarketCap, you’ll see the Volume (24h). This is the amount of the coin that has been swapped hands globally in the last 24 hours.

In the example above, it shows around $9 billion worth of Bitcoin was exchanged in the last 24 hours. This can be interpreted in a variety of ways; it can be viewed as 7.25 billion Euros or in crypto terms, around 861 thousand Bitcoins. Also, you can view it based on the crypto exchanges. In the last 24 hours, around 6.96% of all Bitcoin trades moved through Bitfinex, where the price is $10,370 as of this writing. Basically, volume shows the number of people who are trading the coin. If the price of coins moves up and volume moves correspondingly, that tells us a lot of people are trading the coins. Therefore, it is likely for the prices to continue going up. If the price of coins drop, but minimal number of volume, that signifies that only small number of people trades the coins, which may only be a strategy of a whale or a group of people to control the price of the coin.

Volume is one of the vital measures for a cryptocurrency, because of the numerous ways it can be viewed at. From volume, you can project the trend of a coin. It’s an important matter for traders. Volume can be examined in large or minute detail. Meaning, you can track the volume of a coin by minutes, hours, days, weeks, or months interval. The volume changes reveal if the swings are abnormal or common. High volume of a coin with common heavy movements won’t attract much attention, whereas a coin with less volume, but has heavy trading in the last 24 hours may indicate that there is a possibility for a break-out.

You can also check for the volume in different exchanges. Crypto exchanges differ in coin prices. Thus, CoinMarketCap only shows the general idea of volume of the coin prices and does not reflect exact volume for all exchanges. Also, CoinMarketCap does not reflect exchanges with no fees. These exchanges allow traders and bots send coins back and forth for free, imitating a high volume.

If you notice, the most well-known coins are the ones that are being traded the most. Looking at the volume on the picture above, the top three coins are Bitcoin, Ethereum, and Ripple, which also have the largest market capitalizations. But if you look at lesser known coins, you’ll see some coins that have higher 24h volume than well-known coins. One example is the MonaCoin. It isn’t much talked about, but the 86.97% 24hr volume change is outstanding. This change will surely attract plenty of attention. Comparatively, sorting the 24 hr trading volume of the top 100 coins, Dentacoin stands-out. In the last 24 hrs, it increases by 26.25%. It may look good, but the volume may make veteran investors sceptical. This may mean that it is just sudden jump or pump, and may soon be followed by a correction.

Conclusion

Volume is a sign of sustainability of a change (may it be up or down) for traders. A sudden rise of price with low volume may be a trap set-up by whales, while a significant drop in volume and prices may signify an extended bear run. Cryptocurrency trading is a gamble. There is no sure fire way to know what will happen next. But adding the assessment of volume in your arsenal of trading strategies may increase your chances of winning the crypto trading game.

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Guide for newbies:

Trading Strategy 101 – Understanding Order Books, Buy Walls, Sell Walls, and Fake Walls
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Trading Strategy 101 – Support and Resistance Zones Strategy Guide
Trading Strategy 101 – Easiest Bitcoin Trading Strategy
Crypto Guide for Dummies - Avoiding Beginner's Mistake

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