The analyst explained how Bitcoin’s oscillator data could suggest the cryptocurrency still has plenty of room to grow in this rally.
The Bitcoin VWAP oscillator may indicate potential for further growth
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VWAP is an indicator that calculates the average price of any asset, taking into account price fluctuations alone and weighing values in relation to trading volume.
This means that the prices of assets with higher trading volume have a greater weight in the average than those with low trading volume.
Traditionally, VWAP is a technical analysis indicator that takes into account information available through spot exchanges. In the context of the current topic, VWAP instead uses Bitcoin’s on-chain volume, which is easily apparent to anyone thanks to the blockchain’s transparency.
The indicator of interest here is not VWAP, but rather the VWAP oscillator as mentioned earlier. This metric tracks the ratio of the BTC spot price to VWAP and shows it as oscillating around zero.
The chart below shows the trend of this Bitcoin indicator over the last few years.
The chart above shows that the Bitcoin VWAP oscillator has been trading in negative territory for the last few months. However, the value of the metric has been increasing recently, so if it continues on this trajectory, it could soon approach the neutral level.
In the chart, Woo highlighted the trend that the cryptocurrency’s indicator and price have historically shown. It seems that every time the indicator bottomed out in negative territory and bounced back up, the asset enjoyed some bullish momentum.
The resulting price augment may continue until the indicator reverses into positive territory and forms a high. This has not happened yet with the VWAP oscillator this time. “There is still plenty of room to escape a reversal or consolidation,” the analyst says. “I hate being a trapped Bitcoin bear right now.”
In other news, as noted by CryptoQuant writer Axel Adler Jr. in article X postindividual investors bought assets worth $135.7 million over the last month.
BTC price
At the time of writing, Bitcoin is trading at around $65,000, up 5% over the past week.
Featured image from Shutterstock.com, woocharts.com, chart from TradingView.com
