Cryptocurrency markets entered December with rapid momentum changes, with altcoins rebounding in a clean V-shaped pattern, Bitcoin issuing a historically rare bullish signal, and the Federal Reserve delivering a $13.5 billion liquidity injection, the second-largest since the coronavirus pandemic.
Traders now want to know whether this series of catalysts signals the beginning of a full market reversal.
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Bitcoin issues rare parabolic signal, altcoins erase losses in V-shaped recovery
Altcoins are leading the recovery in December after undergoing one of the strongest 24-hour recoveries in recent months.
“The altcoin recorded a sharp V-shaped recovery, erasing all the downside. Within 24 hours, it surged into the warm-up quadrant where the rise and breakout begins. However, there is one condition: BTC must stabilize and return to $93,500,” Altcoin Vector warned in a post.
V-shaped patterns historically appear before broader trend reversals, but only when Bitcoin confirms the macro direction.
Several analysts believe that confirmation signals may already be forming. According to Gerd van Lagen, Bitcoin’s monthly Bollinger Band width has fallen below 100, a rare technical event that preceded Bitcoin’s major parabolic legs over the past decade.
If history repeats itself, Bitcoin could be preparing for its next major expansion phase if it can regain the $93,500 resistance level.
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Financial institution intervention: Vanguard, BoA, Tether
Santiment social data shows a sharp increase in institution-driven narratives across crypto platforms. Vanguard, which manages $11 trillion, has reversed its anti-crypto stance and opened up trading in Bitcoin, Ethereum, XRP, and Solana ETFs to more than 50 million customers.
Bank of America followed suit by allowing advisors to recommend crypto allocations of 1% to 4% starting in January 2026.
“…[These developments]demonstrate the growing institutional acceptance and mainstream adoption of cryptocurrencies,” Santiment said.
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Strong stablecoin inflows, including Tether’s $1 billion mint for Tron, and hopes for an Ethereum upgrade further support the rally in early December.
$13.5 Billion Fed Liquidity Shock Reprices Markets
The most unexpected catalyst came on Dec. 1, when the Federal Reserve injected $13.5 billion through overnight repos. The move signaled tightening pressure within the financial system and was one of the largest injections of liquidity since the coronavirus pandemic.
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Analyst Tracy Jing believes Bitcoin’s rally was a direct response to liquidity signals.
“In risk markets, ‘no further tightening’ is often enough to change positioning,” he said.
However, analyst Brett cautioned against assuming this was the beginning of quantitative easing, suggesting it was a warning light within the financial system.
The market now depends on whether Bitcoin can regain the important $93,500 level. If BTC stabilizes and confirms the rare Bollinger Band signal, the V-shaped rally in early December could develop into a full reversal supported by liquidity, institutional flows, and seasonal strength.
Otherwise, volatility could return as macro and liquidity conditions continue to change.
