Beware of extreme volumes in cryptocurrencies
Although volume generally helps confirm whether the price will continue to rise or fall, there is a special situation that deserves attention: when the volume is extremely high, much above normal — usually 5 to 10 times more than usual during that period.
When this happens, it is a sign that almost everyone who wanted to buy or sell has already done so. The market "runs out of breath," and the price may stop following the path it was on.
This is called exhaustion, and it can indicate a turn in the market. For example:
If the price rises significantly and the volume explodes along with it, this may be a sign that all buyers have already entered the market and that the rise is nearing its end — the price may start to fall.
If the price drops significantly and the volume also surges, it may indicate that all sellers have already sold off the coin and that the decline is ending — the price may start to rise.
This is a signal that many traders use to try to identify the end of a trend, whether upward or downward.
