Bitcoin breaks through $87,000! Massive volume signals bottoming, analysts warn of V-shaped trap

Bitcoin fluctuated higher on November 24, breaking through $87,000, with Ethereum simultaneously climbing above $2,840. Although the market remains in “extreme fear” with strong bearish sentiment, some analysts believe that by the close on November 21, spot trading volumes on major exchanges surged to recent highs, indicating a large-scale rotation and a high-volume bottoming pattern. However, analysts warn that traders are betting on a short-term V-shaped rebound, and the resulting high volatility could catch retail investors off guard.

Surge in Trading Volume Shows Panic Selling Fully Absorbed

(Source: Trading View)

Market behavior at the close on November 21 provided key clues. Spot trading volumes on major exchanges surged to recent highs, a “high volume” phenomenon that holds significant meaning in technical analysis. When Bitcoin’s price experiences a sudden spike in trading volume during a decline, it usually signals that a large-scale rotation of positions is occurring.

From a technical standpoint: panic sell orders are fully absorbed by buyers outside the exchange, shifting coins from weak retail hands to long-term investors willing to buy the dip. This phenomenon has appeared at key bottoms in Bitcoin’s history, such as the “312 Black Swan” in March 2020 and the “519 Crash” in May 2021, both of which saw similar surges in trading volume at the tail end of panic selling. When retail investors sell indiscriminately out of fear, long-term investors and institutional funds often step in to buy at lower prices.

Order book data shows that as Bitcoin fell to around $80,600, large buy orders began to appear in quick succession. These orders typically come from buyers who have been waiting on the sidelines during Bitcoin’s drop from $120,000 to $80,000, entering the market as panic peaks. When the selling is fully absorbed and prices begin to rebound, it forms the classic “high-volume bottoming” pattern.

However, this technical signal does not guarantee that the bottom is confirmed. Bitcoin may continue to fluctuate within the current price range, forming more complex bottom patterns such as a “W bottom” or “inverse head and shoulders.” A single high-volume rebound only indicates that short-term selling pressure has been released, but more evidence is needed to confirm a trend reversal.

Three Key Features of a High-Volume Bottom

Surge in Trading Volume: Spot trading volume on November 21 hit a recent high, indicating large-scale rotation.

Price Recovery: A rapid rebound from the lows, indicating strong buying support.

Release of Panic Sentiment: The market sentiment index shows “extreme fear,” and selling pressure begins to ease after peaking.

Fed’s Williams Turns Dovish, Providing a Rebound Catalyst

A potential reason for Bitcoin’s recent rebound may be related to dovish signals from the US Federal Reserve. New York Fed President John Williams, speaking at a recent international conference, stated clearly that given signs of softening in the US labor market, the Fed still has room to further lower interest rates “in the near term” to maintain a moderately restrictive monetary policy stance.

Such statements provide important support for risk assets. Interest rate policy is one of the key macro factors affecting Bitcoin prices. When the Fed cuts rates, dollar liquidity increases and investors are more willing to allocate to high-risk assets such as Bitcoin. Williams’ dovish remarks imply that although inflation remains unresolved, labor market weakness may force the Fed to prioritize employment over fighting inflation.

However, uncertainty remains high. Due to the US government’s previous shutdown, some economic data is still unclear, and the Fed’s policy path remains highly uncertain. This data gap makes Fed decision-making more difficult and leaves market expectations for policy direction more divided. If upcoming economic data shows inflation heating up again, Williams’ dovish stance could quickly reverse, putting new pressure on Bitcoin prices.

Historically, dovish comments from Fed officials often provide short-term market boosts, but actual policy actions ultimately determine trends. The market has repeatedly experienced the “dovish talk → market rebound → data worsens → policy tightens → market pullback” cycle. Therefore, investors should not rely too much on comments from a single official, but should continue to monitor real economic data and policy meeting outcomes.

V-Shaped Rebound Trap and High Volatility Warning

Bitwise advisor Jeff Park pointed out, “Traders are betting on a short-term V-shaped rebound, but the resulting high volatility could catch retail investors off guard.” This warning is spot-on. A V-shaped rebound refers to a rapid price surge from the lows, forming a V-shaped chart pattern, usually during an oversold bounce or short covering.

However, V-shaped rebounds are often accompanied by extremely high volatility. Prices may rise 10% in a single day and give back 8% the next, and such wild swings are extremely dangerous for leveraged traders. Many retail investors rush in on leverage when they see prices rebound, only to be liquidated in the subsequent pullback. This kind of “whipsaw” pattern is most common during bear market rallies.

CoinKarma also reminds that, although there are signs of a bottom, volatility remains high and investors should manage their position sizes. The core of this advice is risk management. Even if technicals show bottoming signals, you should not go all in, but keep enough cash on hand for possible further declines. A reasonable position management strategy is to use 30% to 50% of your capital to tentatively build a position at current levels; if prices continue to rise, gradually add to your position, and if they fall back, keep ammunition to buy at lower levels.

According to the market sentiment index, Bitcoin remains in the “extreme fear” zone. This index combines price volatility, trading volume, social media sentiment, and other factors. Extreme fear usually appears near market bottoms, but can persist for weeks or even months. Historical experience shows that moving from extreme fear to neutral or greed often requires a series of positive catalysts, not just a single event.