The price rally of a digital asset rarely comes out of the blue. Before the market value of the token explodes, some collateral forces are set in motion. The asset may suddenly attract abnormally high online attention, its trading volume may increase dramatically, or some market-moving information may become public and trigger the first two examples. Mastering the art of cryptocurrency trading means learning to see those subtle signals early on.
The increase in trading volume is one of the signs that something interesting could be emerging around a crypto asset. Often, trading volume simply follows a price trend, with the coin entering a virtuous cycle where its rising price attracts more traders, increasing volume accordingly. In other cases, abnormally high volume points to strong liquidity and growing investor interest, which can support further waves of appreciation.
One of the ways to receive potentially informative trading volume pump alerts is the Unusual Trading Volume bar on the dashboard of Cointelegraph Markets Pro, Cointelegraph’s subscription-based data intelligence platform.
Last week, four of the 10 tokens that showed the largest increase in trading volume from week to week showed weekly volume highs before their prices peaked. This is how traders could have profitably put this information to work.
RUNE: Big news increases both volume and trading price
RUNE price (blue) vs. trading volume (purple), from February 25 to March 4. Source: TradingView/The TIE
THORChain’s RUNE had a great week, with a Terra integration and upcoming mainnet launch putting a lot of upward pressure on the token’s price. The turning point came on March 1 when RUNE took off from around $3.70 and broke above $5.80 in less than a day. Trading volume soared along with price, with the highest volume for the week coming after the first price spike. Traders paying attention to the volume dynamics were expecting a continued rally as the token price remained high, breaking above the $6 mark on March 4.
FUN: Two trading volume pumps amid continued rally
FUN price (blue) vs. trading volume (purple), from February 25 to March 4. Source: TradingView/The TIE
Funfair’s FUNToken (FUN) price rose steadily throughout the week, with two spikes in trading volume reassuring traders that strong fundamentals fueled the token’s appreciation. The first occurred on February 28 and preceded a local price high of $0.0103 recorded on March 1. Two days later, an even bigger wave of trading volume followed, heralding the week’s high price of $0.0105.
WAVES: volume spikes after the price pump, anticipate an even bigger one
WAVES price (blue) vs. trading volume (purple), from February 25 to March 4. Source: TradingView/The TIE
WAVES added more than 80% to its value over the past week, thanks to the ongoing transition of the Waves platform to version 2.0, a bullish partnership with Allbridge that will ensure cross-chain interoperability, and news of the launch of Waves Labs, a company of $150 million fund that will support the growth of the project in the United States market. On March 1, the price of the token skyrocketed from around $13 to over $19 in less than a day, triggering a corresponding pump in trading volume. Even as the wave of liquidity subsided, the price action remained strong, with the token’s valuation rising further to its weekly high of $20.86.
KNC: Strong Price Momentum Following Increased Trading Volume
KNC price (blue) vs. trading volume (purple), Feb 25-March 4. Source: TradingView/The TIE
Kyber Network Crystal (KNC), the utility and governance token of the Kyber Network, rallied massively on Feb. 28, dragging the token’s trade volume with it. Volume peaked against a price of $2.51, but the party continued as the price continued to rise to $2.91.
Cointelegraph Markets Pro Unusual Trading Volume Dashboard, March 10. Source: Cointelegraph Markets Pro
In addition to the raw data on trading volume outliers available on the Cointelegraph Markets Pro dashboard, the trading volume metric is one of the main components of the VORTECS™ score. An algorithmic tool for comparing historical and current market conditions around digital assets, the VORTECS™ Score can be used to identify historically bullish or bearish setups around each digital asset it tracks, alerting traders to currencies with the most favorable prospects.
Cointelegraph is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk, including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and graphics are correct at the time of writing or as otherwise specified. Live tested strategies are not recommendations. Consult your financial advisor before making financial decisions.
This post This is how traders were alerted to the big rallies in RUNE, FUN, WAVES and KNC last week
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