Volume in Cryptocurrency: Measuring Market Activity

Volume is the amount of cryptocurrency traded in a certain period, for example in the last 24 hours.

What is volume?

Volume can show the direction and movement of a cryptocurrency as well as predict future price and demand.
The 24-hour volume section at the top of the CoinMarketCap website shows the total value of the cryptocurrency traded over the past 24 hours.

Volume is an extremely important indicator for traders to determine the future profitability of cryptocurrencies. Volume also helps exchanges make money by charging commissions for cryptocurrency trades offered on their platforms.

Increased cryptocurrency transaction volume helps establish fair prices for cryptocurrency and eliminates the possibility of distorted pricing. Low cryptocurrency exchange volumes signal inefficient or low transactions, because the prices requested by sellers do not match the offers of potential buyers.

The concept of cryptocurrency volume is similar to that of liquidity, but it is not the same thing. Volume is the total amount of transactions that actually took place, while liquidity is the amount available to trade at any single price.

In most cases, the higher the volume of cryptocurrency transactions, the more liquid the cryptocurrency market will be. However, exchanges with low cryptocurrency volume create excellent arbitrage opportunities for investors.

You can buy some cryptocurrencies at a very low price and sell them for a premium elsewhere. This usually happens if the coin or token is not in high demand or something is wrong with the exchange.