Trading volume – the amount of an asset that has changed hands over a period of time – is one of the key metrics that investors use to track price developments and assess the market outlook for a given coin in terms of liquidity and trader activity.
The ranking below adds to the fortune of five coins that have seen the largest increase in average daily trading volume this month compared to the previous month. Most – if not all – of them have turned out to be massive winners in terms of their monthly returns, but the price-to-trade ratio hasn’t always been what you’d expect.
The data from the Cointelegraph Markets Pro platform shows how these two indicators can influence each other.
Along with several other quantitative metrics, trading volume is at the center of the VORTECS ™ Score – an algorithmic comparison of historical and current market conditions derived from billions of data points collected and analyzed by a proprietary machine learning model.
Polygon (MATIC): + 643.79%
Polygon has had a fantastic month, hit one all-time high (ATH) after another. The coin delivered 329% versus USD and 456% versus BTC, plus a 643% increase in average daily trading volume.
The dynamics of trading volume closely followed each price spike, reaching an impressive $ 11 billion on May 19. On that day, MATIC was responsible for up to 4.5% of the total trading volume of the crypto market.
A look at the VORTECS ™ score diagram shows that trading volume peaks were an essential part of every ultra-high score track that MATIC completed this month (red circles in the graph). These dark green sequences, in turn, hinted at each new leg of the coin’s powerful rally.
Ethereum Classic (ETC): + 229.23%
ETC is a legacy chain of the original Ethereum that was abandoned by much of the community after the DAO raid in 2016. It has a small but enthusiastic following and a reputation for a network that lacks security.
Watchers disagree on what exactly caused ETC’s 300% rise in the first week of May, closely followed by soaring trading volume. Opinions range from users suddenly looking for cheaper alternatives to the main Ethereum network to new investors who consider the coin to be its better-known cousin.
Anyway, at the height of its rally on May 6th, ETC hit a shocking 15.9% of the total trading volume of the crypto market – not bad for a coin that has risen after years of oblivion.
According to the VORTECS ™ diagram, not only was ETC unexpected, but also historically unprecedented. The combination of market and social conditions that preceded the dip was not comparable to those systematically achieved before ETC’s price leaps in the past, as evidenced by largely neutral VORTECS ™ scores.
Telcoin (TEL): + 507.8%
Telcoin, a global remittance platform whose token appreciated 437% against the USD and 600% against Bitcoin last month, owes at least part of its success to Polygon’s fiery run. The likely reason for the increase in TEL in early May was a Layer 2 migration to the Polygon network with lower fees and the subsequent listing of the token on QuickSwap, which opened up attractive conditions for liquidity providers.
As can be seen in the graph, it was the QuickSwap moment that caused the largest increase in TEL’s trading volume, rather than the even bigger price increase that followed a few days later.
It was the same surge in trading activity between May 2nd and 8th that the VORTECS ™ algorithm picked up and, in conjunction with other constituent metrics, deemed worthy of a series of high VORTECS ™ scores approximately three days prior to the final segment of the price increase began to flash.
iExec RLC (RLC): + 1,153.62%
RLC, the native token of the cloud computing platform iExec, saw the largest monthly growth in average daily trading volume, increasing an astonishing 1,153% compared to the previous 30-day period. The price of the coin began to rise after the announcement of a Coinbase Pro listing on May 4th and was further increased by a cascade of further exchange listings, well-known partnerships and collaborations as well as the announcement of a developer rewards program. Over the month, RLC hit 200% versus USD and nearly 300% versus Bitcoin.
As can be seen from the graph from data analysis firm The TIE, the trading volume indicator on May 8th and early May 9th reflected the sharp rise in price movement with a delay of a few hours. The two lines then effectively merged, indicating that any further surge in trading volume was no longer solely due to price movements, but responded independently to the news, raising sentiment around the coin.
As can be seen in the graph, the VORTECS ™ value of RLC was neutral (yellow) in the days before the rise in the coin price and briefly became moderately bullish (light green) during the course of the rally. However, when both the price and the trading volume peaked, the VORTECS ™ Score went from bullish to neutral (red boxes in the graph), which means that in the past such concerted upward movements in both price and trading volume have not been observed constant price followed up or down.
In summary, RLC’s run this month had no clear historical precedents in terms of market and social activity regularities that the VORTECS ™ score could capture. Rather, it was driven by a series of bullish announcements. This is where another element of Markets Pro functionality comes into play, NewsQuakes ™: The same graphic clearly shows two announcements from Coinbase Pro and Bithumb (red circle in table) just before the rally.
OKB token: + 253.28%
The average daily trading volume of the OKEx exchange token OKB increased by more than 250% this month. However, this fact did not lead to a corresponding increase in the price of the utility token: in the same 30 days OKB lost 18.76% against the USD and gained only 4.89% against the beleaguered Bitcoin.
A look at the token price-trading volume diagram explains this discrepancy. While the trading volume largely reflected the price movement in the first half of the month, the two diverged sharply around May 19 and 20, around the time of the market-wide slump. As the price fell, the volume of trade skyrocketed.
This key to this seemingly paradoxical dynamic lies in the nature of the asset. In order to keep the value of the token high, OKEx reduces the OKB offer every three months by buying back a few million burned coins. With the current burn period expiring in late May, some traders have likely bet that OKB will stay afloat if other digital assets were in a tailspin thanks to the guaranteed buyback liquidity. A surge in trading volume supported a brief recovery but was only sustained for a few days before the asset slipped again.
Note that the VORTECS ™ algorithm was unaffected by the increase in trading volume on May 20th as the score remained neutral. As a constantly learning model, it has surely seen such token burn-inspired spikes before – and apparently those spikes haven’t always meant significant price increases in the past.
Any single metric that describes an asset’s market outlook may not, by itself, be meaningful or even misleading. However, it becomes exponentially more useful when contextualized within the recurring patterns of the other metrics of the VORTECS ™ algorithm (including price action, sentiment, and tweet volume).
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