If you Google the question- what is volume in Crypto Market? -then Google will show you a two-line definition. After reading this definition, if you think you are now an all-knowing person about volume in the crypto market and there is nothing else to learn about it, then you are mistaken. The volume of Crypto market is not valueless data but an important Cryptocurrency trading tool. Even it is a widely used powerful tool on Cryptocurrency trading charts, just like moving average, RSI, etc. However, if you know the tricks of volume in the Crypto market, you can forecast the market based on the tricks, whether Bitcoin will go up or down. Also, the volume helps you detect the scam projects. Besides so, using the volume of the Cryptocurrency market, you can also avail yourself of your Cryptocurrency journey in many ways. And, we adorned today’s article with all the Crypto volume-based tricks. You are welcome if you want to ignite your skill with these hidden tricks.
So, what is volume in Crypto?
In the Cryptocurrency market, trading volume refers to the total amount of transactions that take place over a given period of time. For example, when we were writing this analysis-based Crypto article, the trading volume of Bitcoin was $20.6B+ in the last 24 hours. So, according to the definition of Crypto volume, the total number of Bitcoin transactions that took place in the course of the last 24 hours was $20.6B+.
To put it simply, you want to buy Bitcoin today as a believer of it. You would like to hold these Bitcoins for the future. It’s because you think this is the best time for buying Bitcoin as per your analysis. As per your plan, you went to Binance and purchased Bitcoin worth $1500 to hold them for the future. So, the amount you purchased Bitcoin for will show up in the Bitcoin volume for the next 24 hours. And it is known as the trading volume in the Cryptocurrency market.
Maybe now, trading volume in the Crypto market seems simple and meaningless to you. But, it is a powerful tool on the Crypto Trading chart that we have already told you about in the intro part. Now, let’s come to discuss how you can predict the Crypto market’s direction by using Crypto trading volume.
What is 24 Hour Volume in Cryptocurrency?
|Name||Last 24 Hour Volume in USDT||Last 24 Hour Volume in Crypto||Price|
|Bitcoin (BTC)||$28,475,760,157||698,903 BTC||$41,262|
|Ethereum (ETH)||$17,261,464,751||5,613,328 ETH||$3,100|
|Binance (BNB)||$1,974,927,984||4,763,221 BNB||$419|
|Solana (SOL)||$1,836,090,408||17,722,449 SOL||$104.55|
|Terra (LUNA)||$2,093,797,475||24,213,741 LUNA||$86.47|
|Avalanche (AVAX)||$709,702,085||8,990,522 AVAX||$79.75|
How to use Volume in Crypto as a Powerful Technical Tool?
Actually, the Crypto market is full of high volatility, so predicting the upcoming trend of any Crypto project is next to impossible. Even then, crypto traders find out new trade entry points depending on the condition of the crypto market, using their skills. For so, they mostly rely on default indicators, like Moving average, RSI type technical tools.
But unfortunately, they, most of the time, avoid using an important tool named ‘’Crypto Market trading Volume’’. In fact, when the Crypto market takes a counter-trend breaking the existing trend and thus changes its direction, it leaves crypto traders confused about whether they are still in the previous trend or a new trend.
In this case, market trading volume can be their only means of support.
- But how?
So, how to use the Volume of Crypto market to identify the upcoming market condition?
It’s a bit challenging to find a proper breakout setup when the Crypto market stays in the squeeze mood. But in the Crypto market, trading volume can directly help you in finding out the breakout setup if you carefully notice.
(Notably, if you look at the Crypto Chart in any popular exchange, you may see an array of some red and green vertical bars down the chart. Indeed, these vertical bars represent the trading volume in the crypto market. Red vertical bars indicate a sharp increase in selling volume, and contrarily, green vertical bars show buy volume.)
- During the Cryptocurrency squeeze mood, market volume remains low. And, if you see any specific vertical bar doubling while the breakout support/resistance level of that particular side is in close proximity at the same time, it offers a 75% chance of a breakout. But, don’t make your decision seeing only one large vertical bar because the bars next to the large one also play a vital role. So, make your decision in favor of breakout when you see the bars next to the large one are also of big sizes.
- But, the scenario is different if you see the size of the trading volume representing bar becomes as same as the bars in the squeeze mood. We will talk about it in detail in the ‘’Crypto fake breakout setup’’ section.
- The best trick to make a safe entry is to take it at a post-breakout support/resistance line, which is known as retracement entry in another word.
- We are saying to those who don’t know what the term retracement means. Retracement represents an opportunity to enter a trade when a market reverts to a lower or higher price after it has experienced a gain or decline. And retracement entry means taking an entry at the support/resistance level where the market has just reverted.
- So, taking a retracement entry is a perfect choice for those in the Crypto market who want to trade safely, relying on volume.
Detection of fake breakout setup in Cryptocurrency market by volume
Many Crypto traders lose their money entrapped by fake breakouts in the Crypto market. Today, we will teach you a trick through which you can easily detect a fake breakout setup by utilizing crypto market volume.
- When you see the Crypto market is in the squeeze mood, with trading volume representing vertical bars are of small sizes; and all of a sudden, a massive vertical bar comes in place that indicates a breakout possibility in the support/resistant area, then you should not make your decision in favor of breakout setup, seeing this only large bar. The reason is it might be a fake breakout. How?
- If you see the vertical bars next to the large one are of small sizes like those in the squeeze bar. Such a situation indicates a 70% fake breakout setup.
Now the question is- what will you do when there is a fake breakout possibility?
- If the market creates any fake breakout setup, you should take a reversal entry against the breakout-indicating side. The reason is the market fails to break any specific area in a fake breakout setup.
Maybe now, you are thinking that the volume of the Crypto market is only useful for crypto traders. But, the matter isn’t confined to only Crypto traders. By using this volume, crypto investors can know about the legitimacy of any crypto project. Let’s come to know why Crypto volume is so important and what things you can do using this volume.
Why is volume important in Cryptocurrency?
In the Cryptocurrency industry, most newbies fall in a hesitation about how to detect the legitimacy of a Crypto project. It’s because scam projects stay in disguise and pretend like they are legit. In this case, you can easily detect scam projects by seeing their volume, and we will discuss these techniques below along with the description of why Crypto volume is so important.
- First detection technique is that scam projects are basically listed in any C-grade Crypto exchange. And these projects have unusual trading volumes.
- Generally, the trading volumes of these scam projects remain low, in the range of $7,000 to $15,000. But, sometimes the trading volumes of these projects suddenly inflate to more than $700K, $800k, and even 1M.
- So, we suggest you avoid those crypto projects completely which have unusually-low trading volume because these projects are subjected to scams by the end of the day.
- On the other hand, things are not like high crypto trading volume refers to the legitimacy of a project. For example, there is a type of scam project which remains enlisted in non-popular centralized crypto exchanges. These projects band together C-grade exchanges to show fake volume by wash-trading and other crooked crafts to allure Cryptocurrency community members. So, stay careful if you see any project getting a large volume from any controversial crypto exchange because this inflated volume is artificial.
- Sometimes it is also seen that the price of Bitcoin is rising but the volume of the currency is decreasing. If such a situation appears, then the price of Bitcoin may crash. It’s because the price increase of Bitcoin based on such a low volume is not a sustainable way.
Contrarily, things are not like Cryptocurrency high volume means a price increase for any project. Let’s make it clear to you.
Is high volume good for Crypto?
Look, you are mistaken if you think cryptocurrency’s high volume and high price are correlated. The sequence you should know for understanding it is-
- How does volume affect Crypto price?
If you notice any Crypto-bear-market move, you may see the crypto volume of any project increases abruptly in the initial stage. Indeed, when the Crypto market shifts from one phase to another, many activities (trading activities) take place in the meantime that give rise to high trading volume. So, it’s a misconception among crypto investors that a high trading volume in the Crypto-bull market always pushes the price higher.
The volume declines highly compared to that of the bull market when the Crypto bear market becomes stable.
- However, if any popular crypto project is stuck into any specific technical pattern and gets its volume decreased gradually, then the project seems to break the particular pattern. And we see the project’s volume increases at that time, pushing the project’s price higher.
In the Crypto Market, the volume is not like any learning object that someone commits to their brains and then just acts according to what they have learned. This volume is important data and more than a technical tool in the crypto market. However, you have to follow the above-discussed context to understand what Crypto volume is and how it works.
‘’Volume of Crypto market’’ is a significant tool, which is avoided by the majority of the crypto investors. So, writing this article describing ‘’how does volume affect crypto price?’’ is a little of our attempt to make you understand ’’what is volume in Crypto market?’’ and its reality. The volume of the Crypto market is so significant technical tool that it is useful to everyone including investors. So, before investing in any project, use this volume to know the present state of that project.
Wishing you a happy crypto trading journey!