What is volume : Amount of asset traded in specific time period.
Here are four key situations showing how price and volume interact in the crypto market:
---
1. Price Up, Volume Up (Bullish Confirmation):
When prices rise and volume increases, it suggests strong buying interest and confirms the uptrend. More traders are entering the market, pushing prices higher with conviction.
Example: Bitcoin rallies from $30,000 to $35,000 with daily volume doubling.
---
2. Price Up, Volume Down (Weak Uptrend / Reversal Risk):
If price increases but volume declines, the rally may lack strength. It could indicate fewer buyers and potential for a short-term reversal or false breakout.
Example: Ethereum climbs slowly with fewer trades happening each day.
---
3. Price Down, Volume Up (Bearish Confirmation or Panic Selling):
A drop in price with rising volume often signals strong selling pressure. This is usually seen during corrections or crashes, showing that many are exiting positions.
Example: A coin falls 15% in one day with a spike in volume—clear sign of panic.
---
4. Price Down, Volume Down (Weak Selling / Consolidation):
When both price and volume fall, it may suggest the downtrend is losing momentum. Often seen during sideways movement or before a possible reversal or breakout.
Example: A token drifts lower slowly over weeks, but trading activity steadily decreases.
