The impact of the volume of trading on the feeling of the market: understanding of the relationship between criptovaluta negotiation and investors’ trust
Since the popularity of the cryptocurrency continues to grow, it has become a warm topic in the financial world. An aspect that has attracted significant attention is the relationship between commercial volume and market feeling. In this article, we will deepen the impact of the negotiation volume on the feeling of the market, exploring how the volume of negotiations can influence the trust of investors and ultimately influence the price of cryptocurrencies.
Trading volume: a key indicator
The negotiation volume refers to the number of actions or coins exchanged in a certain period. It is an essential indicator that provides information on market activity and investors’ behavior. The volume of trading can be measured in various ways, including the total value exchanged, the average price per action and the number of operations performed.
The impact on the feeling of the market
Research has shown that the volume of negotiation plays a significant role in modeling the feeling of the market. A strong tendency to rise in the commercial volume is often indicative of increasing the trust of investors and optimism for the potential of cryptocurrency. On the contrary, a drop in the negotiation volume can report the interest of investors or trust in the activity.
Studies have discovered that:
* An increase in the trading volume is associated with greater market capitalization and prices. This is because more trader participate in the market, generating purchase pressure and increasing prices.
* The volume of trading down is often connected to the lower feeling of the market. Investors could lose confidence in a cryptocurrency or feel uncertain about his future perspectives.
Types of trading volume
There are two main types of trading volume:
- Volume volumes : these are traders that produce smaller operations in rapid succession, generating high volumes but low overall impact on the market.
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Study cases: Specific cryptocurrencies
Several cryptocurrencies have shown the impact of the commercial volume on the feeling of their market:
* Bitcoin (BTC) : in 2017, the price increased after a drop in the negotiation volume during the US presidential elections, since investors turned to Bitcoin for the activities with the case.
* Ethereum (ETH) : After a significant drop in the volume of negotiation during the US-China commercial tensions of 2018, the price of ETH is bounced due to the increase in market interests and speculations.
Conclusion
The relationship between volume of negotiation and market feeling is complex, influenced by various factors such as the trust of investors, market conditions and the regulatory environment. The volume of trading can significantly affect the feeling of the market, with strong trends upwards which often indicate an increase in optimism while the downward volumes can signal a reduction in the enthusiasm of investors.
For investors, understanding the interaction between the volume of trading and the feeling of the market can help inform investment decisions, whether you try to buy or sell cryptocurrencies. Recognizing the way the volume of trading affects market dynamics, we can better navigate in cryptocurrency markets and make more informed choices on where to invest our capital.
Recommendations for investors
- Monitor the volumes of trading : keep an eye on the volume of the operations performed in the cryptocurrencies chosen.
- Understanding the relationship between volume and feeling : Keep in mind that strong trends up can indicate greater trust of investors, while the downward volumes can signal a reduction in enthusiasm.
- Consider diversification
: spread your investments in various cryptocurrencies to minimize exposure to market fluctuations.