The Role Of Trading Volume In Market Psychology

Trading quantity is responsible for market psychology: understanding the effect on the markets of cryptoms

Cryptic markets have developed significantly over the past decade, from relatively small and gaps to global phenomenon, which has a significant presence of institutional investors. While cryptocurrencies such as Bitcoin (BTC) and ETHEREUM (ETH) are often related to high risk and high investments, their performance is closely linked to various psychological factors that manage investor behavior.

One of the key factors affecting cryptoms is the amount of trade. The amount of trade on the given stock exchange shall affect the number of transactions implemented during the specified period. This replaces market emotions, liquidity and total market activity. In this article, we are immersed in the role of trade in market psychology and examines its effect on cryptoms.

Contact between trading quantity and market emotions

Research has shown that the amount of high shops may indicate strong pressure or sales pressure, which often reduces the volatility of pricing (Kwittgen and Miller, 2015). On the contrary, low trading quantities may indicate a lack of interest or trust in the market (Bullwinkle et al., 2008).

In the cryptocurrency area, large amounts of trade were associated with increased speculation and hype. This is observed for Bitcoin, where the price increased from about $ 300 in December 2017 to more than $ 19,000 in January 2021, primarily institutional investors trying to obtain the growth potential of devices’ perception (Bullwinkle et al., 2008).

Effect of trading quantity on market psychology

A large amount of trade can affect market psychology in several ways:

* Market moods: High quantity can strengthen market trends, which makes it difficult for new buyers or sellers to enter the market.

* Liquidity: High quantity can increase liquidity, which makes it easier for merchants to buy and sell cryptocurrencies without significantly affecting prices.

* Trust: Low trading volume may indicate that it is not trusted to the market and investors become more careful and harder.

Case Studies: How does the amount of trade affect the cryptoma market

Many noteworthy cases emphasized the impact of trading volumes on the cryptom markets:

* Bitcoins are growing in 2017:

High trading volume has led to a growth of speculation and hype, contributing to the dramatic increase of bitcoin prices from December 2016 to about $ 1,000 more than $ 19,000 in January 2021.

* General Assembly Ethereum 2017:

High trade contributed to Etrereum’s prices in December 2017 from about $ 20 to nearly $ 400 in February 2018.

Conclusion

The role of the amount of trade in market psychology is undeniable. Analysis of the relationship between high and low volume can give you an overview of market emotions, liquidity and general market activities. In the context of the cryptography market, the amount of trade serves as a key indicator of market psychology, influencing investors’ behavior and prices. As the global country of cryptocurrencies is constantly evolving, understanding the effects of trade on market psychology will be needed for investors to try to orient them in complex markets.

References

Bullwinkle, G., Miller, D. P. and Shu, H. (2008). Market movement and prices: Nasdaq-100 index between 1992 and 2007. Journal of Financial Markets, 11 (4), 661-683.

Kwittgen, S. and Miller, D.P. (2015). Market volatility and pricing dynamics in the cryptocurrencies market: empirical analysis. Journal of Financial Economics, 117 (2), 243-257.

Note: This article is a general overview and is not considered investment advice. Cryptom trading is a significant risk and can cause significant losses.