How does the underlying price affect the trading volume of digital currencies?

1 answers

• Dec 27, 2021 · 3 years ago
  At BYDFi, we have observed that the underlying price of digital currencies can have a significant impact on their trading volume. When the price of a digital currency experiences a sudden increase, we often see a surge in trading volume as traders rush to take advantage of the price movement. This increased trading activity can be attributed to both existing traders looking to capitalize on the price increase and new traders entering the market. Conversely, when the price of a digital currency drops sharply, we tend to see a decrease in trading volume as investors become more cautious and may choose to hold their positions or sell at a loss. It's important for traders to closely monitor the underlying price as it can provide valuable insights into potential trading opportunities.
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