Crypto Breakout Coming? Volume Indicators Say Yes

The major cryptocurrencies reported slight-to-moderate gains on Monday, as the return of high-volume trading offered compelling evidence that a bearish-to-bullish trend reversal may be afoot.

Market Update

Most of the top 20 cryptocurrencies are trading in positive territory. Among the majors, Ethereum is leading the way higher. The developer’s cryptocurrency has gained 4% in the last 24 hours to reach $122.29, its highest in three weeks. EOS was also one of the standout performers, gaining 3.1% to reach $2.79. Looking further down the crypto market index, Cardano jumped 3.9% to trade at $0.0421.

A breakdown of the top 20 coins is provided below.

The cryptocurrency market peaked at $123 billion overnight as bitcoin returned above $3,700 momentarily. The BTC price is currently trading in the low-$3,600 region on most major exchanges, with aggregate pricing data showing an average of around $3,663. More on this story: Bitcoin Price Aims Higher as Volume Returns, Volatility Crumbles.

The $123 billion market cap exceeds the height of the rally on Friday, which saw more than $10 billion being added. It was also the highest level since Jan. 19.

Volume Tells an Interesting Story

The breakout on Friday was notable for one other very important reason: it was accompanied by a high-volume surge for bitcoin and the major altcoins. Bitcoin’s trade volume exceeded $8 billion on Friday, as market-wide turnover topped $25 billion. Trading activity dipped over the weekend but held above $18 billion on both days. In the last 24 hours, volumes have rebounded 15% to $21.1 billion, according to CoinMarketCap.

Trade volumes are near their highest levels since mid-November, only this time the upsurge in activity is concentrated on the buy side instead of the sell side. To recap: the large volume swing that began on Nov. 14 triggered a major landslide in crypto prices, as the market more than halved in the span of a month. Volumes declined at the end of November and continued lower through mid-December until bargain hunters re-entered the market on Dec. 17. That triggered a multi-week rally for bitcoin and the major altcoins.

Weekly Recap: Crypto Markets Get a Shake-Up as Litecoin Ascends; Bitcoin ETF Has Another Backer at the SEC

The recent surge in volume comes on the heels of a sharp decline in volatility seen across the cryptocurrency market. Basically, declining volatility means the wild fluctuations we’re used to seeing in the crypto market have diminished – at least, momentarily. High-volume trading will likely lead to an increase in volatility, only this time it will push prices higher instead of the other way around – that is, if the trend reversal identified above is sustainable.

In any case, the latest market trend suggests that we may be entering a period of accumulation. This is encouraging given the notable increase in circulation over the past three months. Initially, it looked like most of the returning traders were sellers. Only time will tell whether they have shifted their stance. For now, the signs are encouraging.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi