Total Exchange Volume

November 21, 2023 - Around 2 mins mins to read

What Is Total Exchange Volume?

Total exchange volume refers to the overall quantity of cryptocurrency that has been traded on a specific cryptocurrency exchange. This information is tracked and recorded on the blockchain for almost all cryptocurrency exchanges on a daily basis. The total exchange volume can be found on the website of each exchange and is updated every 24 hours.

Similar to the amount of money being traded on a currency exchange, total exchange volume represents the trading activity of digital currencies.

What Is the Daily Exchange Volume?

The daily exchange volume indicates the amount of currency that has been bought and sold within the past 24 hours.

Importance of Total Exchange Volume

Total exchange volume serves as a crucial indicator for cryptocurrency traders as it reflects the value being traded on an exchange. A higher total exchange volume indicates greater liquidity on the exchange. Consequently, exchanges with higher total exchange volumes are more suitable for trading large amounts of cryptocurrency.

Compared to market capitalization, total exchange volume provides a more accurate measure of value as it considers various factors that influence value. It takes into account not only supply and demand but also active use cases and the growth potential of a cryptocurrency.

Volume plays a significant role in the cryptocurrency market. The volume within a particular market can determine the trading position and overall value of a specific cryptocurrency. Markets with high volume tend to have greater liquidity and lower volatility, making them more attractive to traders. On the other hand, markets with low volume may lack sufficient liquidity to support price movements when large orders are placed.

The primary function of exchange volume is to assess the stability of prices during periods of high activity. For instance, if prices are reaching new highs on low volume, it suggests that buyers are not yet convinced of the sustainability of an upward trend.