The analyst explained that if this metric is accurate, Bitcoin's current surge appears to have reached its halfway point.
Bitcoin VWAP oscillator suggests BTC rally is only half-finished
In a new post on X, analyst Willy Wu posted an update on how the Bitcoin Volume Weighted Average Price (VWAP) oscillator is doing after the latest rally.
VWAP, as its full form suggests, is an indicator that calculates the average price of a cryptocurrency based not only on its price change over the day, but also on the amount traded at that price.
This volume is typically measured using spot volume data provided by a central exchange. Still, in the case of Bitcoin, since the blockchain can be explored by anyone, on-chain volume is used to calculate VWAP instead.
The actual indicator in question here, the VWAP oscillator, takes the ratio between the spot price of a cryptocurrency and the VWAP and represents it as an oscillator around zero.
Earlier this month, Wu pointed out how Bitcoin's VWAP oscillator is creating a bullish divergence in the asset.
As seen in the chart, the Bitcoin VWAP oscillator formed a clear bottom at the time and then rose within negative territory. At the same time, the price of virtual currencies was on the decline.
In the past, such setups have proven bullish for the coin, and the resulting bullish momentum typically lasts until the VWAP oscillator peaks in positive territory. As such, analysts said the coin had a lot of room to run at the time.
Prices have since been recovering, which could suggest that the bullish divergence may be paying off. As Woo noted, after this run, the indicator returned to the neutral mark.
Based on the fact that the previous highs occurred after the indicator peaked in positive territory and the magnitude of these peaks, the analyst concludes that this Bitcoin move is now at its midpoint. Masu.
Regarding how things will develop in the future, analysts say:
Stabilization below the all-time high needs to happen for a bit, then we'll see if the second leg gives us escape velocity to new highs and opens the floodgates.
Wu also shared Bitcoin's “risk signals” that indicate where the asset is when looking at the big picture.
BTC may be part of a cycle where the price reacts violently to capital inflows and risks start to increase. “This is where most of the rapid gains will occur,” the analyst notes.
BTC price
Bitcoin had rallied above $71,000 earlier in the day, but is now below $70,000 and appears to have fallen back since then.
Featured images from Shutterstock.com, woocharts.com, charts from TradingView.com
