In a recent analysis of Bitcoin, an intriguing revelation unfolds: the data from the oscillator of the cryptocurrency suggests that the rally still has ample ground to cover.
Analyst Willy Woo delved into the trend of the Volume-Weighted Average Price (VWAP) Oscillator for Bitcoin, teasing out potential predictions for what lies ahead. In essence, the VWAP is a crucial yardstick that computes the average price of an asset. It accomplishes this by factoring in price swings and considering their weight against the trading volume.
Here’s an easy way to grasp this: simply put, the prices of assets where trading volume is high have heftier clout in the average, as opposed to those where trading volume is low.
The VWAP conventionally operates as a technical analysis indicator that deciphers data available through spot exchanges. In the specific case of Bitcoin, the VWAP leans on the on-chain volume of the cryptocurrency, a measure that is publicly accessible due to the innate transparency of the blockchain.
Fascinatingly, the focal point of this analysis isn’t the VWAP but the VWAP Oscillator. This metric monitors the ratio between the spot price of Bitcoin and the VWAP and portrays it in the form of an oscillator around zero.
Recent trends indicate the Bitcoin VWAP Oscillator has dipped into negative territory in the preceding months. However, the indicator has begun an upward climb. Should this advancement persist, it may soon align with the neutral mark.
Woo spotted a historical pattern in the indicator and the cryptocurrency’s price: a trend where the asset rides a bullish wave whenever the metric hits a low in negative territory and bounds back upwards. This upswing in price may endure until the indicator flips positive and hits a peak. These stages are yet to transpire in this cycle of the VWAP Oscillator, signalling “Still a lot of room to run before reversal or consolidation” as suggested by the analyst himself. For those hesitant about Bitcoin’s progress, the analyst jests, they may feel trapped like a “Bitcoin bear” in the current situation.
In addition to these findings, CryptoQuant author Axel Adler Jr. shared some interesting information. As per his observations, retail investors have purchased assets worth a staggering $135.7 million in the past month alone.
At press time, Bitcoin hovers around $65,000, marking an increase of approximately 5% in the past week. Does the upward trajectory of this digital currency hold further promise? The charts imply robust optimism. Statistics like these reinforce the narrative that Bitcoin’s prodigious rally not just endures, but potentially teems with promise.
