Bitcoin To Reach Escape Velocity? Analyst Makes The Case

Keshav Verma

1 year ago

3 mins read

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An analyst has explained how Bitcoin seems to be showing a good setup to reach escape velocity based on the trend in this indicator.

Bitcoin VWAP Oscillator Has Been Showing A Bullish Divergence

As explained by analyst Willy Woo in a new post on X, a bullish divergence has appeared to be forming in the Volume-Weighted Average Price (VWAP) oscillator of the cryptocurrency.

The VWAP is an indicator that calculates an average price for any given asset, taking into account not only the price but also the volume. More formally, it’s calculated as the cumulative price sum multiplied by the volume divided by the cumulative volume.

This metric puts a higher weight on the price at which more volume is traded. Usually, the exchange-reported volume 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 has used on-chain volume instead to calculate the VWAP for BTC.

The VWAP oscillator, the actual indicator of interest here, is a ratio between the asset’s spot price and VWAP. Here is the chart shared by the analyst that shows the trend in this metric over the past couple of years:

The value of the metric seems to have been on the decline in recent days | Source: @woonomic on X

As displayed in the above graph, the Bitcoin VWAP oscillator has been in the negative territory for the past month but has recently shown a turnaround.

Although the metric is heading up, it’s still very much contained inside the red zone. At the same time as this rise, the cryptocurrency’s price has been heading down instead.

According to Woo, this is a bullish divergence forming for the asset and it’s also one that has a “lot of room to run,” since tops in the coin have generally occurred when the oscillator has reached a point of reversal at relatively high levels inside the positive zone, which should still be quite far away.

“Seems like a good setup for BTC to reach escape velocity,” notes the analyst. It remains to be seen whether the bullish divergence will end up bearing fruits for the asset.

In some other news, the Bitcoin whales (investors carrying 1,000 BTC or more) participated in buying around the recent lows of the asset. Still, market intelligence platform IntoTheBlock has revealed that the accumulation sprees from these large investors have been displaying an overall downtrend.

The trend in the netflow of the BTC whales over the past couple of months | Source: IntoTheBlock on X

From the chart, it’s visible that the Bitcoin whales have been buying at each of the dips in the last few months, but it’s also visible that the scale of this buying has been diminishing with each one.

This could be a sign that the appetite for buying among these investors, although still present, is getting smaller with each dip.

BTC Price

When writing, Bitcoin is trading at around $63,500, up over 1% in the last seven days.

Looks like the price of the asset has been going up over the last few days | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, IntoTheBlock.com, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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