How much cryptocurrency has been traded over a set period, such as the past 24 hours.
Volume can show the direction and movement of the cryptocurrency as well as a prediction of future price and its demand.
Volume is an extremely important indicator for traders to determine the future profitability of cryptocurrencies.
It also helps exchanges make money by charging fees on cryptocurrency trades offered on their platforms.
A greater volume of cryptocurrency transactions leads to fair cryptocurrency prices and removes the chance of distorted pricing.
A low cryptocurrency exchange volume signals inefficient or low trades, as the asking prices of sellers fail to meet the bids of potential buyers.
Cryptocurrency volume is similar to the concept of liquidity, but they are both not the same.
Volume is the sum total of actual trades taking place, meanwhile liquidity is the amount available for trading at any single price.
Usually, the higher the volume of cryptocurrency transactions, the more liquid the crypto market will be.
Low cryptocurrency volume exchanges, however, do create great arbitrage opportunities for investors.
Some cryptocurrencies can be bought at a very low price and sold for a premium elsewhere.
This normally occurs if the coin or token is not in high demand or there is something wrong with the exchange’s operational features.