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Research Paper | Economics and Finance | Volume 15 Issue 6, June 2026 | Pages: 497 - 503 | India
The Relationship Between Trading Volume and Volatility in the Cryptocurrency Market: An Empirical Analysis
Abstract: This paper examines whether elevated trading volume in the cryptocurrency market is more consistent with noise trader or informed trader behavior by analyzing its relationship with price volatility. Using minute-level BTC/USDT data from Binance, the study focuses on Bitcoin using OLS regression analysis. Two market conditions are considered: a crash day (May 19, 2021) with high volatility and a control day (July 18, 2021) with normal market conditions. The analysis finds a positive relationship between trading volume and market volatility across both periods, with the relationship notably stronger on the crash day (β 1 ? 72.84) relative to the control day (β 1 ? 5.55), approximately 13 times larger. This suggests that elevated trading activity during crisis periods may be associated with amplified volatility and is more consistent with noise trader behavior than informed trading. Given the focus on two dates in 2021, findings may not generalize across broader market conditions or cryptocurrencies.
Keywords: Cryptocurrency Markets, Bitcoin, Trading Volume, Volatility, Noise Trader Theory, Behavioral Finance, High-Frequency Data, Market Microstructure
How to Cite?: K.S. Jeevan Pranav, Bo Yuan, "The Relationship Between Trading Volume and Volatility in the Cryptocurrency Market: An Empirical Analysis", Volume 15 Issue 6, June 2026, International Journal of Science and Research (IJSR), Pages: 497-503, https://www.ijsr.net/getabstract.php?paperid=SR26608143639, DOI: https://dx.dx.doi.org/10.21275/SR26608143639