Trading Volume Impact

Definition ∞ Trading volume impact refers to the degree to which the quantity of an asset traded influences its price and market liquidity. High trading volume generally indicates strong market interest and can confirm price trends, making it easier to buy or sell large amounts without moving the price significantly. Conversely, low volume can lead to higher volatility and difficulty in executing large orders. This metric is a key indicator of market health and asset demand.
Context ∞ Trading volume impact is a fundamental metric consistently analyzed in crypto news to gauge market activity, investor interest, and the strength of price movements. The current discussion often highlights how sudden surges or drops in volume can signal significant shifts in market sentiment or potential price reversals. Monitoring trading volume provides critical insights into the underlying supply and demand dynamics of digital assets.