After nine years of struggle in the crypto space, I've seen too many people fail to understand the relationship between volume and price, turning potentially profitable situations into losses, and holding onto positions that should have been cut, resulting in liquidation. In fact, every rise and fall in the market is 'talking'; trading volume is the heartbeat of capital, and the K-line is the expression of emotion - mastering these 6 iron rules of volume and price can help you avoid 80% of enticing traps and see through 90% of bottom-fishing scams.
1. "Fast Rise, Slow Decline" Holds Secrets: The core code to distinguish between washing the plates and offloading;
In 2023, SOL surged from $100 to $200 in just 3 days, then oscillated in the $180-$200 range for 15 days. During this time, countless people shouted 'the top has been reached' and hurriedly left, only to miss the subsequent rise to $300. This is a typical 'fast rise, slow decline' - the main force uses a rapid surge to break through the psychological defense lines of retail investors and then slowly oscillate to wear down the chips of the indecisive.
The key to judgment lies in two points:
Does the trading volume shrink during slow declines: If the trading volume during the fluctuation period decreases by more than 60% compared to the rise, it indicates that the main force has not fled, but is just washing the plates;
Is the retracement magnitude controllable: If the retracement after a fast rise does not exceed 30% and holds key support levels (like the 20-day moving average), it is likely a continuation pattern;
Conversely, when a certain altcoin surged from $0.5 to $2 in 2024 and then dropped to $1 with a sudden increase in volume within 30 minutes, this 'surge + instant collapse' volume-price combination is a typical enticing offloading scenario; not running at this time means picking up the bag.
2. 'Fast drop, slow rise' is a trap: Before bottoming, first look at the rebound momentum;
Last year, BTC crashed from $48,000 to $36,000 (a 25% drop), then rebounded to $42,000 in 10 days. Many people thought 'the drop is over' and heavily bottom-fished, only for it to later fall to $30,000. The essence of this 'fast drop, slow rise' is: after the shorts are released, the longs are unable to organize an effective counterattack, and the rebound is more like a rescue of trapped positions.
The core indicator for identifying such traps is 'rebound trading volume': If the trading volume during a slow rise is more than 50% lower than during a fast drop, it indicates that no new funds are entering, and the rebound is just a 'dead cat bounce'. Before the collapse of LUNA in 2022, I avoided the disaster of falling from $100 to zero because I noticed that its every rebound volume was weaker than during the declines.
Remember: A real bottom rebound must be accompanied by 'increased long阳' - for example, when ETH rebounded from $1500 in 2023, the single-day trading volume was twice that of the decline, this was the signal of capital entering the market;
3. Increased volume at the top is not scary; low volume is the real alarm;
In 2021, when BTC was at the high of $69,000, the trading volume exceeded $30 billion for three consecutive days; many people thought 'massive volume means massive price', only to miss the last surge to $70,000. In fact, increased volume at the top is not necessarily a bad thing - as long as the volume continues, it means that the battle between bulls and bears is fierce, and the trend has not yet reversed.
The real danger is 'new highs with reduced volume at the top': In 2024, a certain platform token rose to $10, a new high, but the trading volume decreased by 70% compared to previous highs, indicating that buying pressure was exhausted, and a subsequent drop of 40% was expected. This 'no-volume new high' is like a rocket without fuel, taking off is the endpoint.
4. Increased volume at the bottom indicates sustainability; a single day of increased volume is often 'fishing';
In 2023, a certain DeFi token dropped from $0.1 to $0.05, with a single-day volume increasing 10 times, and the community was filled with cheers of 'main force entering the market', but those who chased in were all trapped. The key to increased volume at the bottom is not 'one-day explosion' but 'continuous verification':
Healthy bottom volume: Continuous trading volume exceeding 3 times the recent average for 3 consecutive days, accompanied by small upward candlesticks;
Cooperate with low volume retracement: After a rise with high volume, when volume quickly shrinks (by more than 50%) during the retracement, it indicates good chip locking.
When I bottomed out LINK in 2020, I saw it increase in volume for 5 consecutive days, and when it retraced, the volume dropped sharply, which is why I dared to enter at $8, ultimately rising to $20 before exiting - this volume-price combination is the standard signal for the main force to build positions.
5. Divergence in volume and price means exit first: The K-line deceives people, but the volume does not;
Too many people focus on the K-line for rising and falling, but neglect the 'early warning' of volume. In 2024, when ETH was at $3000, the K-line recorded three consecutive days of upward movement, but the trading volume decreased day by day, which is a typical 'price rising, volume shrinking' divergence - and indeed the price later retraced to $2600.
The core logic of the volume-price relationship is:
Price must rise with volume: Capital entering the market will push up prices; a rise with low volume is like a water source without water;
Declines can be on low volume: After panic selling is exhausted, a decline on low volume often signals a bottom;
Be cautious of increased volume during a decline: If the trading volume suddenly increases by more than 3 times during a decline, it indicates that large funds are fleeing, and you need to stop loss immediately.
6. Holding no position is a top strategy: Learn to hit the pause button amidst the noise;
At the peak of the bull market in 2021, my account was floating with profits in the tens of millions, but seeing the market signal of 'general rise with low volume', I decisively converted 80% of my position into stablecoins. Subsequently, the bear market plummeted 70%, and it was this period of holding no position that preserved my profits. Many people think 'holding no position means missing opportunities', but they do not realize that 90% of the trends in the crypto space are 'noise'.
When should you hold no position?
Markets that cannot be understood: When the volume-price relationship is chaotic, neither looking like washing the plates nor offloading, it is better not to act;
After consecutive losses: When the mindset is unbalanced, holding no position for a day can avoid emotional trading;
Before significant events: Such as before the Federal Reserve raises interest rates or regulatory policies are issued, the market often fluctuates chaotically, and waiting is the best choice.
Nine years of trading experience tell me: The key to making money in the crypto space is not how many opportunities you seize, but how many traps you avoid. The volume-price relationship is like the 'electrocardiogram' of the market; understanding it can prevent you from blindly chasing heights during surges, panicking and cutting losses during declines, and frequently trading during fluctuations. Remember, staying alive is the opportunity; losing 100,000 is equivalent to earning 100,000 - these 6 iron rules are worth setting as your phone wallpaper, looking at them three times a day.
Blindly working alone will never bring opportunities; pay attention to Super Brother, I will lead you to explore tenfold potential coins! Top-tier resources!
