Why is volume important in cryptocurrencies?

Good day, could you please explain why volume is such a crucial factor in the realm of cryptocurrencies? I understand that it pertains to the total amount of a particular digital currency being traded over a given period, but how does it actually impact the market and the investors? Is it an indicator of market sentiment or liquidity? And how do traders utilize volume data to inform their decisions? I'm eager to gain a deeper understanding of this concept and its implications.