Let me ask you something.

How many times have you seen a coin move 3x, 5x, or even 50x and thought, “I knew I should’ve bought it when it was just sitting there doing nothing”?

It’s a frustrating moment.

You had it on your watchlist. You even said to yourself, “If this breaks out, I’m buying.” But the breakout happened fast. And by the time you blinked, the move was already over. And now you’re watching from the sidelines, reloading charts and kicking yourself.

This post is about being able to identify that move so you can take advantage of it.

Let’s talk about a pattern that most people in crypto completely ignore but it’s one of the most explosive setups in any market. It comes from Mark Minervini, a U.S. investing champion who turned $100k into millions using nothing but repeatable, systematic principles.

It’s called the Volatility Contraction Pattern.

And once you learn how to spot it in crypto, you’ll start seeing it everywhere right before the big moves happen.

What Is the Volatility Contraction Pattern (VCP)?

The VCP is exactly what it sounds like:

A pattern where volatility contracts over time while price forms a series of higher lows, and resistance starts tightening. It looks like a coil winding up, ready to spring.

Here’s what you’re looking for:

1. A prior uptrend: This is not a bottom-fishing setup. VCP works best after a coin has already shown strong performance.

2. A pullback or consolidation zone: Price starts moving sideways. Volatility begins to compress. Volume starts drying up.

3. A series of higher lows and tighter ranges: Each pullback is smaller than the last. Buyers are stepping in sooner. Sellers are getting exhausted.

4. A clear line of resistance at the top: This is the breakout level. It’s the line the coin needs to cross for the pattern to activate.

5. A volume spike breakout: When the coin finally breaks above resistance with volume, that’s your entry. That’s the launchpad.

In simple terms: the price is tightening up like a spring. When it finally breaks, it doesn’t just move; it explodes.

VCP works so well because crypto is full of noise. Investors are rapidly moving from one coin to another, there are so many emotions flying everywhere, and the majority of the investors seem to be newer investors.

Since crypto is not traded as well as other markets, and is so new/misunderstood, this leaves lots of coins open to inefficiencies, especially in smaller ecosystems. These inefficiencies allow us to ride a pattern like this when other people don’t really recognize that this move is happening.

Crypto also functions as a 24 hour market allowing price action to happen consistently compared to only during the day like traditional stocks.

How to Use VCP in Crypto

Let’s break it down with a mental checklist:

1. Start with a strong performer
   You’re not trying to catch bottoms. Look for coins that had a previous strong run-up—30%, 50%, or more. That shows you there’s interest.

2. Look for a tight base forming
   After the pump, price starts to consolidate. The wild swings start to dry up. Look at the daily chart. Are the candles getting smaller? Is each dip getting shallower? You’re getting closer.

3. Watch for a series of higher lows
   This shows buyers are getting more aggressive. They’re not letting the coin fall as far as it did before. Meanwhile, resistance remains clear. The range is getting tighter.

4. Volume dries up
   No one’s paying attention anymore. Perfect. The move is building pressure. When that volume starts to increase again—especially on a move above resistance—you’ve got your signal.

5. Entry is on the breakout
   You don’t guess. You don’t front-run. You wait for confirmation. If the coin breaks out on strong volume, you enter. If it doesn’t, you wait.

What Can Go Wrong?

VCP is powerful, but not perfect. You can use VCP, but don’t expect to win every single time. I think about 50% of VCP setups can fail either after the breakout, before the breakout, or they can retest the point of breakout before heading higher.

This doesn’t mean that the method is flawed. Just that other market conditions can impact the crypto setups or that the chart is trying to tell you more.

Here’s what to watch out for:

• Fake breakouts: If the breakout happens without volume, maybe be a little more cautious to trust it. A breakout without energy is a trap.

• Low liquidity coins: If there’s not enough volume in the base, the pattern might not be reliable.

• No prior uptrend: If the coin hasn’t proven itself before, the pattern may be forming for a breakdown instead and you might just be a tad early.

This is not a catch-every-knife system. It’s a way to focus on strength. Think of it like finding a runner who’s been resting ready to sprint again. It’s okay to give up a few percentage of gains in order to ensure the uptrend is worth your attention and has actual movement behind it.

Crypto is full of noise.

New projects launch daily. Trends rotate. Narrative shifts happen overnight. It’s easy to get overwhelmed and start chasing green candles just because they’re green.

But the best moves, the real wealth makers, almost always give you a signal.

They contract. They coil. They compress.

And when the move comes, they explode.

Mark Minervini’s VCP is one of the best tools you can add to your crypto playbook. It gives you structure in a chaotic market. It gives you a plan. And more importantly, it helps you catch the real movers before they leave the station.

You don’t have to chase pumps anymore.

Just wait for the coil.

Then strike.

Thanks,

Dawson