Several cryptocurrency traders consider trading volume the most critical metric for evaluating a coin's value.
In 2018, a CoinDesk Markets poll revealed that 38% of respondents preferred trading volume as their primary price indicator. They cited its objectivity compared to technical indicators that require subjective chart interpretation.
This guide explores everything you need to know about crypto trading volume and why it matters for traders and investors.
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What Is Crypto Trading Volume?
Crypto trading volume measures how often a specific coin changes hands within a given timeframe. Investors use this metric to gauge:
- Market interest in buying/selling particular assets
- Liquidity across all exchanges or specific platforms
- Popularity trends for specific cryptocurrencies
The most common measurement period is 24 hours.
How to Calculate Crypto Trading Volume
Calculating trading volume requires determining the total value of crypto assets traded during a specific period.
Example: If $10 billion worth of Bitcoin trades on Binance within 24 hours, then Binance's BTC trading volume = $10 billion.
What Crypto Trading Volume Indicates
Trading volume reflects market interest in specific coins:
- High volume suggests strong buyer/seller activity, often driving further interest
- Low volume indicates limited trading interest, potentially signaling price stagnation
Key observations:
- Volume typically increases with rising prices as new investors enter
- Meme coins (DOGE, SHIB) show explosive volume during market surges
- Divergence between volume and price may indicate artificial price movement
👉 Track real-time crypto volumes
Why Trading Volume Matters
Volume analysis helps traders:
- Identify market trends - Sustained high volume often precedes price movements
- Assess liquidity - Higher volume means easier entry/exit positions
- Spot anomalies - Unusual volume spikes may indicate manipulation or news events
- Evaluate coin health - Exchanges may delist consistently low-volume coins
Pro Tip: Compare weekly, daily, and monthly volumes to distinguish normal fluctuations from significant trends.
Interpreting Volume Signals
- Price + Volume Increase: Organic growth signal
- Price Increase + Low Volume: Potential temporary spike
- Sudden Volume Spike: Possible whale activity or news event
- Consistent Low Volume: Limited market interest
Frequently Asked Questions
Q: How reliable is trading volume as an indicator?
A: While valuable, always combine volume analysis with other metrics like market cap and technical indicators for comprehensive evaluation.
Q: Can trading volume be manipulated?
A: Yes, some entities may create "wash trades" to artificially inflate volume. Cross-check data across multiple exchanges.
Q: What's considered "high" trading volume?
A: This varies by coin. Compare a coin's current volume against its historical averages rather than absolute numbers.
Q: How does volume differ between exchanges?
A: Significant variances may indicate regional interest or potential arbitrage opportunities.
Q: Should I avoid low-volume coins completely?
A: Not necessarily—some emerging projects have legitimate reasons for low volume. Just exercise extra caution.
Final Thoughts
Crypto trading volume provides critical insights into market dynamics. Smart traders:
- Monitor volume trends alongside price movements
- Verify activity across multiple exchanges
- Watch for discrepancies between volume and price action
- Use volume data to confirm other technical signals
Remember: Sustainable growth typically shows corresponding volume increases, while artificial pumps often lack volume support.
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