Lesson 6: Volume in Crypto

🪙 Reading Crypto Charts in 5 Minutes · Lesson 6 of 10

In Lesson 5 you learned to read the trend from higher highs and lower lows. Now we add the gauge that tells you whether the move has any weight behind it: volume.

Price shows you what happened. Volume shows you how many people meant it. A 5% pump on heavy volume is a crowd. The same 5% pump on dead volume is three traders pushing a thin book around. Same candle, totally different story.

What the bars are telling you

Volume is the row of bars under your price chart. Each bar is how much of the coin traded during that candle. Tall bar, lots of activity. Short bar, not much.

The signal is the comparison, not the raw number. A volume bar that's three times taller than the ones around it means something just changed: news dropped, a big buyer stepped in, or stops got hit. Your eye should go straight to the spikes. The simplest rule is that you want volume to rise in the direction of the move you care about.

The exchange volume catch

Here's the crypto-specific trap. Stock volume runs through regulated exchanges, so the number is clean. Crypto volume is scattered across dozens of exchanges, and not all of them report honestly. Some have inflated their figures with wash trading, the same coins bought and sold to fake activity.

So the volume on one exchange's chart is only that exchange's slice. A coin can look busy on a small exchange and barely trade anywhere else. Two habits fix most of this. Stick to the volume on a major venue you trust, and on thin altcoins, treat any single-exchange volume figure as a rough hint, not gospel.

Why low volume fakes you out

Crypto trades 24/7, and the quiet hours are where fakeouts breed. Late at night, when the order books thin out, it takes very little money to shove price through a level. You'll see BTC poke above resistance at 4am on a tiny volume bar, trap the breakout buyers, then slide right back under once real volume returns in the morning.

That's a low-volume fakeout, and it's everywhere in crypto. The defense is simple. A move on weak volume is a maybe, not a yes. If price breaks a level you care about but the volume bar is shorter than average, assume it's noise until the crowd shows up and confirms it.

Volume on breakouts

This is where volume earns its keep. A real breakout has a volume surge under it. Price clears resistance and the volume bar jumps well above the recent average, often two or three times. That surge is the proof that buyers are willing to chase the higher price.

This pairs with what you marked in Lesson 4. A support or resistance level that breaks on a fat volume bar is far more likely to hold than one that breaks on a whimper.

Want to go further? Our explainer on volume in trading covers the core ideas in more depth, and on-balance volume shows how to roll volume into a single running line that tracks whether buyers or sellers are winning.

Next up

You can now read trend, levels, and volume together. In Lesson 7 we'll put them to work on actual chart patterns: flags, ranges and breakouts, and double tops and bottoms, plus why crypto's volatility means you set wider targets than a stock trader would.