Analysis of crypto traded volumes indicates a bleak trend; down 80% across the market

Benjamin Friedrich/The Block

Quick Take

  • Volume on exchanges is a good indicator of the health of the space, but faking volume skews the numbers
  • By only tracking the volume of exchanges known to not fake the majority of volume, we get a good proxy for volume of the whole sector
  • The volume is now as low as it’s been since July 2017; with no sign of reversing in sight
  •  Traded volume is a lagging indicator of price; as the price increases, more people start trading and volume increases

Traded volume on cryptocurrency exchanges is perhaps the best indicator of the health of the space. Volume is a great proxy for the interest in cryptocurrencies. 

The problem is billions of dollars in volume is faked every day. Several exchanges fake volume to create an illusion of interest in order to lure in more customers.