Question #183 ·
What can trading volume tell us about Bitcoin’s market activity?
- Lower trading volume indicates more traders are active and means the market is overheating rapidly today
- High volume always leads to higher prices and guarantees increased market stability in any market conditions
- Trading volume only reflects past transactions and offers no accurate insight into future short price movements
- High trading volume suggests strong interest and liquidity while lower volume during rallies can indicate accumulation Right answer
Why is this the correct answer?
This is correct because trading volume measures how much Bitcoin changes hands over a period. High volume reflects active trading and easy entry or exit from positions, meaning greater liquidity and often heightened interest. When rallies occur with relatively low volume, it often signals that fewer sellers are willing to part with Bitcoin and that buyers are steadily accumulating rather than speculating heavily, which beginners can watch to gauge market behavior.