Getting started with blockchain | What is the use of the "volume" indicator? How to look?

In "When I eat more than 7,000 bitcoins in half an hour, what is the meaning of "depth" in the mouth" , we have a " transaction depth " in the article. In fact, there is a term related to the depth of the transaction – volume .

Today, we will talk to you about what volume is, and whether it has guiding significance for our trading behavior.

01 What is the volume?

Volume is the same as market capitalization and is one of the most important indicators in cryptocurrency. On non-small or CoinMarketCap and other market information websites, it is easy to check the volume (or turnover) of a currency in the past 24 hours, and the trading volume ratio of each trading platform.

For example, in the figure below, the volume (volume) of BTC in the past 24 hours is 39.8 billion (596149 BTC). The largest volume of transactions is the OKEx platform, followed by the currency security.

▲ Source: Non-small

In essence, the volume shows how many cryptocurrencies have been traded. The change in market turnover reflects the situation of funds entering and leaving the market. It can be used as one of the indicators to analyze market sentiment and judge the market's subsequent rise and fall.

What is the problem with 02 volume?

The essence of the transaction is that one party wants to buy and the other party wants to sell. When the two parties reach a consensus on the transaction price, the transaction is completed. The increase in trading volume indicates an increase in market divergence.

The Miller hypothesis believes that when equilibrium is equal, the price must be overestimated, and the price reflects the expectations of optimists. That is to say, when investors have the willingness to sell, and there is a large amount of buying demand (optimistic), the trading volume becomes larger, the stock price or the price of the currency is pushed up, and the bubble is blown up.

When the trading volume is low, the desire to buy and sell is low, and the pessimism dominates and the price decreases. Therefore, the increase in trading volume usually precedes the rise in the currency price, and the decline in trading volume usually falls below the currency price. In the downtrend, if the volume becomes larger, the volume will fall and the downtrend may continue.

03 Volume guidance

1, can infer the direction of movement of the cryptocurrency

By tracking the volume of transactions in the past 24 hours, last week or the past 30 days, it can be revealed whether the recent fluctuations in the cryptocurrency is an aberration or a normal state. For example, if Bitcoin prices rise and show huge volume, which means that many people are buying, it may continue to rise; if Bitcoin prices fall, but the volume is small, it means only a few people support this. A downward trend.

2, can track the trading volume of the trading platform

Different trading platforms often have different prices, and the volume can reveal which platform the main buyer or seller of the currency is on.

The cryptocurrency is different from the stock market. Since the cryptocurrency has no financial statements, the indicators that can be utilized are very limited. As a result, the volume of transactions in the cryptocurrency market is more pronounced.

However, it should be noted that some small trading platforms have “brushing” behavior, and the volume is not accurate data, so it needs to be cautious as a reference indicator.

04 summary

Volume is a very important indicator in cryptocurrency trading and plays a very important role in judging price movements and investment decisions. If you want to be a qualified investor, the volume of this indicator must be concerned.


Author | Listening to the wind

Produced|Baihua blockchain (ID: hellobtc)


『Declaration : This series of content is only for the introduction of blockchain science, and does not constitute any investment advice or advice. If there are any errors or omissions, please leave a message.