Trading volume in cryptocurrency is the amount of activity surrounding the token or the coin. This metric helps crypto traders to understand the popularity of the asset and how frequently it is being exchanged among people. In layman’s terms, the trading volume of cryptocurrency can be understood as a ledger recording the buying and selling activities around each token or coin. Trading volume is a metric that comes in handy while planning future investments or trades.
Trading volume is the publicly traded volume and does not involve the privately traded cryptos through OTC markets.
Healthy investments are identified by looking at the trading volume of the cryptocurrency. Although a token might look great on paper if there are no trades around it, it can prove dangerous for your portfolio. Dead projects often have low trading volume and often signify a delisting from crypto exchanges. Investors also look at the unusual trading volumes around a crypto asset to seek out opportunities for investments since the high trading volume will likely drive the price of the crypto higher, thus helping them book more profits.