Why Volume Indicator Was Created

The Volume indicator was developed to quantify the number of units of a cryptocurrency traded over a specific time period. It serves as a foundational metric for understanding market activity and trader participation. The creation of the Volume indicator stemmed from the need to differentiate between significant price movements and those driven by minimal participation or thin markets.

In traditional finance and crypto markets alike, price changes accompanied by high volume are often seen as more reliable signals. When volume is low, even sharp price moves may lack conviction, suggesting potential manipulation or lack of interest. The Volume indicator provides an objective measure to validate price trends and trading decisions.

This indicator also helps identify accumulation and distribution phases of an asset. Traders and analysts use it to spot when large players might be entering or exiting positions. Sudden spikes or drops in volume often precede major price trends, making it a vital tool in market analysis.

As blockchain-based markets operate 24/7 with decentralized participants, volume becomes even more important in crypto, where liquidity can vary significantly across exchanges. The Volume indicator thus plays a key role in uncovering true market sentiment hidden behind price action alone.