Dollar volume
Why do analysts measure trading activity in money moved rather than in coins that changed hands?
In plain words
Dollar volume is the total value traded over a period: the price of each trade multiplied by the size of that trade, added up. It answers how much money passed through the market, rather than how many units of the asset.
Why it matters
Coin counts compare badly across time or across assets, because a unit can be worth very different amounts. Money counts stay comparable. High dollar volume usually means it is easier to enter and exit without moving the price, while low dollar volume means a modest order can shift the market considerably.
In a real week: BTC, week of 30 January 2023
In the week of 30 January 2023, BTC traded $45.53bn, which was 1.46 times its average for the prior twelve weeks, while the price fell 3.41% from 23743.37 to 22932.91 and ranged between 22500.0 on Monday and 24255.0 on Thursday. Money changing hands ran above its recent norm through a falling week.
A common mistake
Reading high dollar volume as agreement about direction. It shows how much money traded, not whether buyers or sellers were in control.