Bitcoin shorts, whales, and the next move – Is a V-shaped rebound in play?

Key Takeaways

Are BTC bulls in control?

3% rebound might be more of a bear trap, than a mark of real spot demand.

Should traders load shorts?

With no dip-buying in sight, opening shorts appear to be strategic. Past flash crashes have seen V-shaped recoveries, but this bounce isn’t guaranteed to flip into a full rally yet.

Last week’s Bitcoin [BTC] dump reminded us where the real action is – Derivatives. Coincidence or not, massive BTC shorts cashed out, pocketing huge profits from BTC’s nearly 8% drop in under 72 hours.

However, excessive greed cuts both ways. In fact, Coinglass data revealed $620 million wiped out in the last 24 hours, with shorts taking the bigger hit – Accounting for roughly 67% of total liquidations.

And yet, OG whales are still HODLing shorts. With that setup, another short squeeze could be on deck as BTC picks up momentum. Question is – Will this bounce stay a bear trap or flip into a breakout?

BTC rebounds as market calls Trump’s bluff

History shows us that flash crashes are the ultimate crash course for traders. 

Even before Trump’s “don’t worry about China” tweet, the market called the bluff. On Polymarket, the odds of China tariffs tanked from 25% to 10%, showing that the market was pricing in a near-zero chance of escalation.

Trump’s Truth Social post later confirmed it, backing the market’s read. The result? BTC managed to dodge a Q1-style flash crash, back when it nuked by nearly 30% as tariffs went live worldwide. 

Source: TradingView (BTC/USDT)

As a result, traders are now pricing in another V-shaped rebound. 

Back in April, when BTC dumped by 10% in under 10 days on the “Liberation Day” FUD, the flash crash was followed by a clean V-recovery as the crypto reclaimed the $82k-range and ripped to new highs soon after.

However, that setup didn’t repeat itself during the August $124k ATH, when the price failed to reclaim its prior high. This time, a vertical re-capture of $125k is key. To pull that off, the cryptocurrency needs to show this bounce isn’t just a short squeeze.

Will Bitcoin bulls flip the script on greed?

At the time of writing, BTC shorts seemed to be piling in, hinting at signals most traders might be missing.

At $117k, the “winner” whale who banked $192 million during the flash crash is back, loading a $163 million short at 10x leverage, with a liquidation price of $123k. The position’s already sitting on $2.5 million in floating P&L.

However, is this just greed? According to Santiment, top whales are bleeding out, trending lower with zero dip-buying action – A sign of caution for bulls.. Simply put, the usual “buy the fear” play isn’t happening right now.

Source: Santiment

Against this setup, loading shorts might be smart. 

With weak bid support, BTC’s 3% bounce might read more like a classic bear trap than real spot demand, keeping weak hands in control. Until that flips, a V-shaped run to $125k will remain too far-fetched for now.