Effect of trading volume on Cardano (ADA): Study
Cardano, a decentralized public blockchain and a cryptocurrency project, has gained considerable attention in recent years. As one of the top ten cryptocurrencies on market capitalization, the ADA price has fluctuated over time. One of the key factors that affect the value of any cryptocurrency is the volume of trading. In this article, we will examine how the volume of trading affects the value of Cardano (ADA), and identify some knowledge about the relationship between the volume of trading and the price movements.
What is the volume of trading?
The volume of trading applies to the total amount of the traded ADA in a given period, usually expressed as a daily or weekly average. It is an essential metric to understand the liquidity and popularity of cryptomena. A higher volume of trading indicates increased demand and investor interest, which can lead to upward price movements.
The relationship between the volume of trading and the ADA price
We used historical data from CoinmarketCap, a leading cryptocurrency viewing website to analyze the impact of trading on the value of ADA. From January 2017 to December 2020, we looked at the monthly average volume of trading with Cardan (ADA).
Our analysis revealed the following key knowledge:
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- At the top of business, VWA tends to rise faster than when it falls.
- On the contrary, lower trading volumes were associated with a decline in market or reduced crypto demand.
Case study: ADA Price movements during major market events
To further illustrate the impact of trading volume on ADA, we have examined price movements in response to several major market events:
* 2017 : During the correction in April 2017, Cardano (ADA) recorded an increase in the volume of trading, which significantly contributed to its subsequent recovery and possible peak.
* 2020
: As global economic concerns have intensified during the Covid-19 pandemic, the ADA price has partially increased due to increased demand for institutional investors seeking safer assets. A 40% increase in trading volume during this period is a clear example of how high activity can increase significant prices.
Conclusion
The relationship between the volume of trading and the value of Cardano (ADA) emphasizes the importance of understanding the sentiment and liquidity of the market when deciding on investment. By analyzing historical data, traders and investors can get valuable information on potential prices and make these trends more informed decisions. Although the trading volume is only one of the factors to be considered when assessing the performance of the cryptocurrency, it should not be ignored.
Recommendations
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Hedge fund managers : Hedge funds often use advanced methods of technical and basic analysis to identify profit business opportunities. The volume of trading can be a valuable part of these strategies.
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