Volume and Trades
CVD Normalized

CVD - Normalized

To unravel the "CVD - Normalized," it's crucial to understand the actors and fundamental concepts of the crypto market, as well as the importance of volume in trading analyses. Let's dive into this ecosystem, exploring the figures of whales and minnows, the essence of trading volume, and how all these elements intertwine in the Normalized Cumulative Volume Delta.

Whales and Minnows: The Market Players

In the vast ocean of the crypto market, "whales" represent the large institutional investors or individuals with significant market-moving power due to the size of their transactions. Like true whales of the ocean, their movement can create waves that affect the entire trading ecosystem.

On the other hand, "minnows" are the small investors, numerous but with limited individual capacity to influence the market. The dynamics between whales and minnows are fundamental to understanding market flow and psychology, especially under the lens of theories like Wyckoff's, which emphasizes the importance of recognizing the actions of big players in accumulation and distribution phases.

The Role of Volume

Volume, the total sum of cryptocurrencies traded in a given period, is the market's pulse, indicating the intensity of trading activity. It's a key component for analyzing the strength behind price movements, offering insights into buying or selling pressure and the possible continuation or reversal of trends.

CVD - Normalized: The Synthesis

"CVD - Normalized," or Normalized Cumulative Volume Delta, is an analytical tool that synthesizes this dynamic, tracking the net difference between buying and selling volumes, adjusted to normalize variations across different assets or exchanges. This indicator allows for a more refined analysis of order flow, offering a clear view of the behavior of whales and minnows in the market.

With "CVD - Normalized," it's possible to compare the behavior across different exchanges, analyzing how whales and minnows operate in each, or to view the aggregated panorama of all available exchanges. This comparison can reveal divergences between price and CVD, indicating potential trend reversals or confirmations of price movements.

Price x CVD Divergence

The divergence between price and "CVD - Normalized" is a powerful analysis tool. A positive divergence, where the price drops but CVD rises, may indicate accumulation by whales, suggesting a potential reversal to the upside. Conversely, a negative divergence, with the price rising and CVD dropping, can signal distribution by whales, pointing to a possible downside reversal.

"CVD - Normalized" is, therefore, more than just a simple indicator; it's a lens through which we can observe the interaction between whales and minnows, the impact of volume on the market, and the nuances of institutional and individual behavior in the crypto universe. It equips traders with a comprehensive and deep view, essential for successfully navigating the turbulent waters of the cryptocurrency market.