Dean
Latest posts by Dean (see all)

The bitcoin market has grown exponentially over the past few years, with daily volumes reaching $4.3 billion in the spot markets. As traders know, the daily amount is a reliable technical indicator of overall activity and price. Daily volumes are dependable indicators of a trend, a continuation, or a trend reversal.

The latest bitcoin news impacts daily volumes. As a bitcoin trader, you can use the latest news and its effect on volume for your advantage. This is how to do it.

Trend Build Up

When there are high volumes coupled with increasing prices, it is an indicator of a positive trend. It shows that traders are enthusiastic about the currency and want to buy more to keep pushing prices higher. It beats the fundamental laws of economics, which suggests that as prices rise, demand falls. In the case of a traded commodity, when prices rise, demand does too, and it further fuels increasing prices.

Volume and Exhaustion Moves

Usually, when a trend comes to an end, it will show a sudden spike in volumes. These sharp rises mean that the trend is about to die out. You should cash in your positions if they were built based on the pattern. It applies to both an upward and downward direction.

Monitoring the latest bitcoin news helps understand when a trend is about to end and square-off positions.

Identify Bull and Bear Runs

Market action is subject to several factors like demand, price, government policy, and local and global events. To monitor how this impacts the bitcoin volume, it becomes necessary to follow the latest bitcoin news. You can trade and get news alerts from several websites and mobile apps. It will enable you to identify an upcoming bull or bear trend.

Recent Volume History

History tends to repeat itself. The same goes for bitcoin trading volumes. Since bitcoin trading is only a decade old, the historical data can be a sound indicator of future volumes. Since volume is synonymous with liquidity, the higher the volume, the more liquid the bitcoin currency. This is the most effective technical standard that helps create profitable short-term positions. There are different volume indicators used by traders. They are discussed below.

On Balance Volume (OBV)

This is a simple technique of adding volume when the market closes higher and subtracting volume when it closes lower. It is a good indicator of whether bitcoins are being accumulated. It also provides information about divergence, such as price increase with moderately increasing volumes.

Chaikin Money Flow

This method helps measure divergence in the short-term. If prices close in the upper range and volume increases, the trend is positive, and if the price closes in the lower range with high volumes, the trend is negative.

Klinger Oscillator

In this method, the daily buying and selling volume is summed to measure deviation from the zero lines. It provides valuable trade signals.

Volume and Price Reversals

Volume helps traders analyze how the prices will respond and build short or long positions accordingly. For example, if prices and volume are both rising, traders can go long. When prices fall, and volume is high, they can go short. In case of divergence, when prices rise, but volume falls, or vice versa, they can hold off on trading.

Trading volume is a technical tool that helps examine trading patterns and predict future short-term trends. Monitoring the latest bitcoin news makes it easy to trace triggers that will lead to changes in volumes and, therefore, prices. Traders use volume while trading in stocks and other currencies, and bitcoin trading is no different.