Are the holders in profit? Measure VWAP, not the chart
How do I tell whether the people already holding an asset are winning or losing?
The idea
A price chart tells you where an asset started and ended. It does not tell you what the people who bought it actually paid. The volume-weighted average price answers that: it weights every price by how much money changed hands there. Compare spot to VWAP and you know whether the average participant is up or down — which is what drives their behaviour.
The formula
typical price of a day = (high + low + close) / 3
VWAP = sum(typical price x quote volume) / sum(quote volume)
underwater share = turnover on days whose typical price > today's price, / total turnoverWorked example — XRP
| Spot | 1.062 |
| 30-day VWAP | 1.106 |
| Spot vs VWAP | -4.0% |
| Money underwater | 96.7% |
96.7% of the month's turnover changed hands above 1.062. The average buyer paid 1.106 and is down 4.0%.
Common mistake
Judging "cheap" from the distance to the low. An asset 80% off its high can still sit far below the price the crowd paid, which means overhead supply, not value.
Do it yourself
Export daily candles for any pair, apply the formula above, and compare your number to the one on this page. If they disagree, one of us is wrong and it is worth finding out which.