What Is Trading Volume of Cryptocurrency?
The trading volume of cryptocurrencies is an indication of how many coins are being bought and how many coins are being sold on cryptocurrency exchanges. When a cryptocurrency has trading volume, it drives on-chain activity. The trading volume is essentially an interest indicator for many cryptocurrency investors who rely on this piece of information.
How Is It Calculated?
Every single transaction has to involve a buyer and a seller, this is simply how all of it works. Then they reach an agreement on a specific price, the transaction is then recorded by the exchange they end up using, and on the blockchain of the cryptocurrency they are using.
So, the volume of exchange is the total sum of all market pair volume reported from the exchange throughout the span of the last 24-hours.
There is the adjusted volume, volume from spot markets that excludes markets that have no fees and transaction mining, and then there is the reported volume which is the volume from all spot markets.
The exchange collects all of this data and records it, and that is how it is calculated.
Where Does the Analytical Data on Cryptocurrency Come From, and How Do You Check It?
If you're interested in where the trading volume analytical data comes from, there are numerous explorers that provide you with the opportunity to view them.
Some of the most popular ones include:
Why Is Trading Volume an Important Metric for Cryptocurrency?
When you narrow it down, a cryptocurrency trading volume is the number of coins that have managed to exchange from one user to another user throughout a specific time frame, typically calculated at the 24-hour range. They are used by investors to identify momentum in a cryptocurrency and confirm a specific trend. As the trading volume increases, the prices move in the same direction. If a cryptocurrency is continuing higher and has an uptrend, its volume has to increase as well.