Understanding the “volume” Ethereum concept and its consequences at the price of bitcoins
As regards the measurement of cryptomena performance such as Bitcoin (BTC) or Ethereum, two popular indicators are the volume and number of transactions. However, these two funds are often associated in discussions on market dynamics. In this article, we immerse ourselves into what every record, its differences and how they affect the price of these cryptocurrencies.
Volume: the amount of BTC
The volume applies to the total amount of Bitcoin trade (BTC) at a certain period. Basically, it is the number of coins stated or against each other. In other words, it measures the “volume” of the market. Larger volume indicates greater activity and potentially greater liquidity.
To illustrate it, consider the example:
Suppose the following transactions will occur:
Business 1: 100 BTC @ 75 USD
Shop 2: 0.5 BTC @ 76 USD
Shop 3: 100 BTC @ 77 USD
Shop 4: 100 BTC @ 78 USD
Shop 5: 100 BTC @ 78 USD
There were five individual transactions, but the total volume is calculated as follows:
Volume = (1 store × 75 USD) + (0.5 store × 76 USD) + (2 transactions × 77 USD) + (3 transactions × 78 USD) + (4 transactions × 78 USD)
= $ 75 + $ 37 + $ 154 + USD + $ 312 USD
= $ 870
In this example, the total volume is about 870 bitcoin units.
Number of transactions: Number of contracted contracts
The number of transactions filled in concerns the actual number of stations or items listed. This record includes each transaction, including small, such as micro-stops and large offers. A larger number of transactions indicate more market activity.
To look at it from the point of view:
Business 1: 100 BTC @ 75 USD
Shop 2: 0.5 BTC @ 76 USD
Shop 3: 100 BTC @ 77 USD
Shop 4: 100 BTC @ 78 USD
Shop 5: 100 BTC @ 78 USD
The number of transactions is calculated as follows:
Number of transactions = 1 store + 0.5 transactions + 2 transactions + 3 transactions + 4 transactions
= 8.5 transactions
In this example, the total number of transactions is around 8.5.
application
Although the size and number of transactions are important indicators of understanding market activity, they represent different aspects of cryptocurrency results. The volume is the number of transactions, while the number of transactions measures the actual contract or listed item.
To illustrate the difference, consider the example:
The trader may be more interested in the movement of prices (eg trade or lower) than commercial volume or the amount of transactions. If the price increases by 10%, but only a few transactions (such as trade 1) have been carried out during this period, the market is still unstable and prone to further fluctuations.
Conversely, if the price decreases significantly (eg 20% per day) due to a large number of transactions (8.5 in our example above), this may indicate increased liquidity and support from traders.
To sum up, understanding the volume and number of transactions is decisive for informed decisions about the purchase or sale of bitcoins and Ethereum. Investors, recognizing the differences between these indicators, can get a more comprehensive image of the market dynamics and create more efficient business strategies.