Volume analysis is a way of reading the market that observes the number of coins that have been bought and sold over a certain period, to help understand and predict whether the price will continue to rise or fall.
In the world of cryptocurrencies, volume is basically the amount of coins that have changed hands in a specific time — it can be in minutes, hours, or days. The higher the volume, the more people are trading that coin.
This analysis is based on two simple ideas:
High volume: when the trading volume is increasing or reaches a value well above normal, this usually confirms that the price trend (upward or downward) is strong, meaning the movement has strength and can continue.
Low volume: when the volume starts to decrease or is much lower than usual, this indicates that the current trend is losing strength, the market is lacking “excitement,” and the price may start to change or remain stagnant.
When the price of a crypto rises and closes near the highest value of the day, and the volume is also high, it shows that a lot of people are buying — the market is strong. When the price closes near the lowest value of the day and the volume is also high, it means that a lot of people are selling — the market is weak.
