Decoding the CVD Chart: Uncovering Buying and Selling Pressure in Bitcoin's Spot Market

The cumulative volume delta (CVD) chart is an essential tool for traders monitoring Bitcoin's spot market. It combines a volume heatmap with a line-based indicator that tracks net order volume by size, providing valuable insights into buying and selling pressure.

The CVD chart has two primary sections: the upper panel displays a volume heatmap, which visualizes trading activity at various price levels over time. Brighter zones on the heatmap indicate areas where the price has lingered or where sharp movements have occurred, often marking potential support or resistance levels.

The lower panel contains the cumulative volume delta (CVD) indicator, which tracks the net difference between aggressive buying and selling volume. Each line color represents a different order size bracket, from small retail orders to large institutional-sized trades.

By breaking down CVD by order size, traders can gain a more granular view of market participants. Small orders often reflect retail sentiment, while large orders may signal institutional activity. A divergence between the lines can hint at a shift in market leadership.