Blockchain
Will Bitcoin Reach Escape Velocity? Analyst Makes Case – TradingView News
An analyst explained how Bitcoin seems to show a good setup to reach escape velocity based on the trend of this indicator.
Bitcoin’s VWAP oscillator has shown a bullish divergence
As analyst Willy Woo explained in a new post on X, a bullish divergence appears to be forming in the cryptocurrency’s volume-weighted average price (VWAP) oscillator.
VWAP is an indicator that calculates an average price for a given asset, taking into account not only the price but also the volume. More formally, it is calculated as the sum of cumulative price multiplied by volume divided by cumulative volume.
This metric gives greater weight to the price at which a greater volume is traded. Typically, the volume reported on the exchange is used to find the metric, but for a cryptocurrency like Bitcoin, the entire transaction history is visible to the public thanks to blockchain data. Woo instead used on-chain volume to calculate VWAP for BTC.
The VWAP oscillator, the indicator of interest in this case, is a ratio between the spot price of the asset and the VWAP. Here is the graph shared by the analyst showing the trend of this parameter in the last two years:
BTC News
As shown in the chart above, the Bitcoin VWAP oscillator has been in negative territory for the past month, but has recently shown a trend reversal.
Although the parameter is increasing, it is still largely contained within the red zone. Simultaneously with this rise, the price of the cryptocurrency has been falling.
According to Woo, this is a bullish divergence forming for the asset and it is also a divergence that has “a lot of room to run”, as the coin’s highs have generally occurred when the oscillator has reached a reversal point at relatively high levels indoors. the positive zone, which should still be quite far away.
“It seems like a good setup for BTC to reach escape velocity,” the analyst notes. It remains to be seen whether the bullish divergence will ultimately pay off for the asset.
In other news, Bitcoin whales (investors carrying 1,000 BTC or more) participated in the buying around the asset’s recent lows. However, market intelligence platform IntoTheBlock revealed that the crazy accumulations of these large investors have shown an overall downward trend.
From the chart, it is visible that Bitcoin whales have been buying on every dip over the past few months, but it is also visible that the scale of these purchases has decreased with each one.
This could be a sign that the appetite to buy among these investors, while still present, is waning with each dip.
Bitcoin price
At the time of writing, Bitcoin is trading at around $63,500, up more than 1% over the past seven days.