The cryptocurrency market has rebounded after hitting a bottom—what is the reason for the V-shaped recovery, and what are the core underlying causes?

Just between 3 PM and 4 PM on Friday.
Bitcoin once plummeted nearly 11%.
Lowest approaching recent extreme value
Recovered most of the losses within a few hours during the night.
The increase is close to the limit value of 10%.
(Unlike air coins that fluctuate by hundreds or thousands at any moment,
Bitcoin has risk control models and pricing mechanisms.
This kind of trend of first plummeting and then rapidly rising.
It's not random noise.
but rather the result of the combined effects of short-term mechanisms and mid-term structural changes
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The following is based on four questions.
Explain cause and effect and evidence in one go.
1
Why was there a rapid drop of nearly 11% on Friday afternoon?
It is not a single reason.
but three forces erupt simultaneously
Contract Deleveraging + Forced Liquidation Chain
The scale of forced liquidations around November 21 is in the hundreds of millions to billions of dollars.
Form an automatic sell-off waterfall!
Long-term accumulation has led to negative market selling pressure.
Continuous redemption of spot ETFs
Mainstream ETFs such as BlackRock and Fidelity
Frequent net outflows of hundreds of millions of dollars appeared after mid-November.
Directly turn into spot selling pressure
The macro risk sentiment has worsened.
U.S. stocks fell in sync.
Risk assets collectively retreat
Triple force overlay → liquidity vacuum
This is the real reason for the one-time drop of 11%.
There is no simple story like "a certain big player crashing the market."
2
Why can it quickly rebound close to 10% at night?
The logic is completely different.
The core is price recovery and liquidity recovery.
Arbitrage funds and market makers quickly intervene
The price difference between contracts and spot prices widens after a sharp decline.
Institutions buy spot and sell contracts to lock in risk-free returns.
Strong support effect
Enter the market after completing deleveraging and bottom fishing.
Weak longs have been cleaned out.
The rest are buyers resistant to price drops.
The sudden drop zone triggers institutional allocation demand
Short covering + technical rebound
Further push up the price
(The busiest moments for quantitative firms and market makers!)
Volatility Organizer!)
So this 10% at night is a technical adjustment.
Not a trend reversal
3
What is a spot Bitcoin ETF?
How does it affect the price?
It is a fund listed on the exchange.
The fund takes investors' money.
Go to the spot market to buy real Bitcoin directly and hold it.
Net inflow → Must buy coins → Drive up prices
Net outflow → Must sell coins → Lower prices
The impact is immediate, real, and structural.
Since October, ETFs have been continuously inflowing.
Become a continuous large outflow
This is the strongest underlying logic for the recent weakening of Bitcoin.
4
Structural changes since October
Is it the underlying reason?
Yes, and it is a decisive reason.
The epic liquidation at the beginning of October
From over a billion to thirty billion dollars in scale
Peel away a layer of market leverage and confidence.
The aftereffects continue to the present.
The ETF has changed from the largest buyer to the largest seller.
The buyer structure has been systematically hollowed out.
Institutions and long-term holders are generally turning cautious.
The upward momentum has significantly weakened.
These three structural changes
Determined the current market
The fundamentals of "easy to fall but hard to rise".
Summarize in three sentences.
Friday plunged 11%: Contract liquidations + ETF redemptions + macro risk aversion, a liquidity vacuum created by the three forces.
Nighttime surge of 10%: price gap repair + arbitrage + bottom fishing + short covering, a technical rebound rather than a reversal.
Since October, the aftermath of liquidation and the continuous outflow of ETFs are the fundamental reasons for the intensified fluctuations and weak market structure in this round.
(End)
Disclaimer: Not investment advice!
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