How to Check Crypto Trading Volume

Imagine you’re at the heart of the bustling crypto market, where millions of dollars exchange hands every second. Whether you're a seasoned trader or just dipping your toes into the sea of cryptocurrencies, one thing you’ll constantly encounter is the term "trading volume." But what exactly is trading volume, and why does it matter? This article will dive deep into the concept of crypto trading volume, how to check it, why it's crucial for making smart investments, and some advanced tools you can use to track it like a pro.

What Is Crypto Trading Volume?

At its core, trading volume represents the total quantity of a cryptocurrency traded during a given time period. It indicates how active a particular market is. Higher volume typically signals a more active market, which could imply strong investor interest, while lower volume might suggest weak interest or even potential price manipulation.

Crypto trading volume can be measured in different ways:

• Absolute Volume: The total amount of a crypto asset traded in terms of its own units.
• Dollar Volume: The total amount traded, calculated in terms of a fiat currency like USD.

Why Should You Care About Trading Volume? Trading volume acts like a window into the market's soul. It helps you understand market liquidity, price volatility, and sentiment. Here's how:

1. Liquidity: If you're planning to buy or sell a large amount of a cryptocurrency, high volume ensures you'll be able to enter and exit positions easily.
2. Price Volatility: Higher volumes often lead to less price volatility. In contrast, low volume can lead to drastic price swings.
3. Market Sentiment: Volume spikes usually indicate important news or events, showing how investors are reacting to changes in the market.

Where to Check Crypto Trading Volume

Now that you know what crypto trading volume is and why it’s crucial, the next logical step is learning how to check it. There are several platforms and tools available, some simple and some designed for advanced traders.

1. CoinMarketCap

One of the most popular websites for tracking cryptocurrency data is CoinMarketCap. It’s an excellent tool for both beginners and pros.

• How to Check:
  • Go to the homepage.
  • Search for the cryptocurrency you’re interested in.
  • Once you’re on the specific coin’s page, scroll down to see the trading volume.
  • You can also check 24-hour trading volume for a broader view.

2. Binance

As one of the largest crypto exchanges, Binance provides real-time data on trading volume.

• How to Check:
  • Log into your Binance account.
  • On the trading screen, you'll see the live trading volume next to the price charts.
  • Binance also provides historical volume data for detailed analysis.

3. TradingView

For those who prefer more advanced analysis, TradingView offers comprehensive charting tools.

• How to Check:
  • Go to TradingView and select the crypto asset you wish to analyze.
  • Below the price chart, you’ll find the volume bars showing how much has been traded over a specified period.
  • You can adjust the time frame for a more granular or broad perspective on the volume trends.

4. Messari

Messari is a platform designed for institutional investors and serious traders. It offers not just volume data but in-depth research and analysis.

• How to Check:
  • Visit Messari’s asset page.
  • Look for the "Volume" tab, which offers detailed breakdowns by exchange and time period.
  • Messari also provides "Real Volume" figures, which are adjusted to account for potential wash trading on less reliable exchanges.

5. On-Chain Metrics: Glassnode

For those who want to go deeper, on-chain data platforms like Glassnode offer more granular insights into trading volumes based on blockchain activity.

• How to Check:
  • Create an account on Glassnode.
  • Use the “Volume (on-chain)” metric to see how much of a given cryptocurrency is being transacted directly on the blockchain.
  • This type of analysis can give insights into long-term trends that traditional trading platforms might miss.

Advanced Tips for Monitoring Trading Volume

Beyond just checking volume on these platforms, savvy traders use more advanced techniques to get an edge.

1. Volume-to-Market Cap Ratio

This ratio gives insight into how much of a cryptocurrency's total market value is being traded. A high volume-to-market-cap ratio could indicate high liquidity, making it easier to trade without slippage.

2. Whale Activity

"Whales," or entities that hold large quantities of crypto, can significantly impact trading volume. Tracking whale wallets and their trading activity through platforms like Whale Alert can give you a sense of potential market shifts before they happen.

3. Order Book Analysis

While trading volume tells you what has been traded, the order book shows you what is about to be traded. Analyzing buy and sell walls can give you an idea of future price movements. Many exchanges like Binance and Coinbase offer real-time order book data.

4. Volume Weighted Average Price (VWAP)

VWAP helps traders to identify whether the price is above or below the average price traders have paid, giving a sense of market trend. Most platforms like TradingView and Binance offer VWAP as an indicator.

Common Pitfalls When Using Trading Volume

While trading volume is a powerful tool, it has limitations. Volume manipulation can occur, especially on smaller exchanges, where wash trading or fake volume can distort the true market activity. This is why it's essential to rely on trusted platforms or those that adjust for such practices, like Messari's "Real Volume" metric.

Volume Spikes Can Be Deceptive

Not every spike in volume means something important is happening. Sometimes large trades by institutional investors or whales can cause short-term spikes that don't necessarily indicate long-term trends.

Conclusion: Trade Smarter with Volume Data

Crypto trading volume is an indispensable tool in any trader's arsenal. From understanding market sentiment to spotting liquidity risks, it offers insights that can guide better trading decisions. The platforms we've discussed—CoinMarketCap, Binance, TradingView, and more—provide easy ways to monitor volume, whether you’re looking for basic data or advanced analytics.

The next time you're about to make a trade, take a moment to look at the volume. Is the market active? Are large players involved? Use the trading volume as a lens through which you view the market. You'll find that with practice, volume can tell you as much—if not more—than price alone.

So, how will you use trading volume to make your next big move?