Trading volume refers to the total amount of a cryptocurrency that has been bought and sold over a specific time period (usually 24 hours). It's expressed either in dollars (USD volume) or in units of the cryptocurrency itself. High trading volume indicates strong market interest and liquidity, while low volume can signal weak demand or illiquid markets.

Volume is a critical metric for traders because it provides insight into market momentum and the strength of price movements. A price increase on high volume is generally more significant than one on low volume.

Key Characteristics of Trading Volume

  • Liquidity Indicator: Higher volume = easier to buy/sell without price impact
  • Trend Confirmation: Volume should increase in the direction of the trend
  • Market Interest: Shows how much attention a cryptocurrency is receiving
  • Exchange Comparison: Compare volumes across exchanges to find best liquidity
  • Manipulation Detection: Abnormal volume spikes can indicate pump-and-dump schemes

Real-World Example

If Bitcoin sees $30 billion in 24-hour trading volume during a rally, it confirms strong buyer interest. If the same rally happens on only $1 billion volume, the move may be less sustainable.

Understanding Trading Volume is easier when you're familiar with these related concepts:

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