Has Bitcoin Found Its Bottom in November?

Determining the lowest point of Bitcoin's price is a challenging task, even for experienced analysts. Recent on-chain indicators and trading data, however, suggest that Bitcoin may have established a bottom this November. The key challenge now is to ascertain whether this bottom is a fleeting occurrence or the beginning of a longer-term trend reversal.

Key Takeaways

The Whale vs. Retail Delta indicator suggests a bullish trend for Bitcoin as whales increasingly dominate long positions.
Bitcoin’s spot trading volume has surged in November, while derivative open interest has decreased, indicating a healthier market.
Analysts warn about the risk of a “dead cat bounce,” which could prompt traders to be cautious and decrease their leverage positions.

Whale Activity and Market Liquidity Indicate a Potential November Bottom

The Whale vs. Retail Delta indicator is currently presenting an unusually strong bullish signal for Bitcoin. This indicator gauges the disparity between the long positions held by whales—large investors—and those held by everyday retail traders. It serves as an indication of whale sentiment regarding Bitcoin's short-term volatility in the derivatives market.

Joao Wedson, founder and CEO of Alphractal, noted that for the first time in history, whales have established dominant long positions that significantly eclipse those of retail traders.

Bitcoin Whale vs. Retail Delta. Source: Alphractal.

Earlier in the year, particularly in February and March, this indicator also exhibited a significant spike that coincided with Bitcoin's price bottoming out near $75,000. Wedson explained, “Whenever these levels reached such heights in the past, local bottoms formed — although large positions also faced liquidation during these periods.”

Additionally, Bitcoin's spot trading volume is on the rise, while open interest in the derivatives market is on the decline. This change reflects a more robust market that relies less on speculative activities. According to CryptoQuant data, Bitcoin's daily spot volume on Binance remained above $10 billion throughout November, a notable increase compared to the average volumes of previous months. In contrast, Binance's daily open interest has dropped by $5 billion from last month.

Binance Spot/Future Volume. Source: CryptoQuant.

These trends indicate that speculative positions are being eliminated, with capital shifting back into the spot market. This means investors are buying actual Bitcoin rather than engaging in high-leverage trading. This transition is conducive to providing Bitcoin with stronger and more sustainable upward momentum.

Analyst Darkfost commented, “When this kind of flush-out occurs, analysts often say that the market gets reset and prepares for a healthier phase. This is particularly true if the spot market begins to engage, which is exactly what we are witnessing on Binance.”

These indicators lend support to the notion that Bitcoin may have reached a solid bottom this November.

However, not all analysts share this optimistic viewpoint. Some warn that the current rebound could be merely a “dead cat bounce.” This term refers to a short-lived price recovery occurring after a period of sharp decline, before the downtrend resumes.

This potential risk may lead traders to lower their leverage and reduce their positions in anticipation of a possible sudden market downturn.