Why doesn’t the trading volume shown by an exchange equal real buy-side demand?

When a token’s 24-hour trading volume suddenly surges, many people’s first reaction is:

Is a big player entering the market?

But trading volume alone can’t answer that question.

Every trade has both a buyer and a seller.

If someone makes an aggressive market buy, someone else provides the liquidity to sell.

So an increase in trading volume only indicates that trading activity has picked up.

It doesn’t directly prove that there’s a net inflow of funds, nor does it prove that the price will rise.

What’s more, different trading platforms may use different methods to calculate volume, vary in liquidity quality, and differ in their ability to detect abnormal trading.

Trading volume is a thermometer for market activity, not a compass for the direction of funds.

When researching the market, it’s best to look at price movements, order book depth, trade composition, and other information together.

Don’t mistake a single number for the whole market story.

#Cryptocurrency #TradingVolume #Crypto