- Bitcoin has confirmed a powerful inverse head and shoulders pattern, signaling a strong bullish reversal despite short-term price declines.
- Liquidation dominance spiked to 18.1% as long positions closed rapidly, showing that bears still apply heavy pressure on the market.
- Analysts believe Bitcoin’s breakout above the $113,000 neckline could drive price discovery, but caution remains due to high volatility risks.
Bitcoin is showing some notable momentum as analysts confirm the strongest reversal pattern in years. The cryptocurrency trades near $112,511 after completing an inverse head and shoulders structure.
According to trader Merlijn, the breakout has been confirmed with a neckline retest. This technical formation suggests Bitcoin may soon push into fresh price discovery zones. Traders view this move as a potential trigger for the next major rally despite current daily declines.
Strong Technical Reversal Pattern
The inverse head and shoulders began forming in December 2024. The left shoulder developed around $105,000 before Bitcoin corrected lower. By March 2025, prices touched $75,100, forming the head of the pattern. This marked the lowest point of the cycle.
Source: Merlijn The Trader
Recovery started in April as buyers re-entered. May strengthened momentum with consistent upward pressure. By June and July, the right shoulder formed near $101,000 to $105,000. Finally, August saw a decisive breakout above the neckline at $113,000.
Moreover, September’s continuation phase signals that Bitcoin has successfully retested this critical level. Volume patterns also supported the move, strengthening its technical reliability. Hence, analysts believe resistance zones may no longer cap the rally.
Market Liquidity and Liquidations
However, not all signals are fully aligned. Analyst Axel Adler Jr highlighted a sharp increase in liquidation dominance. Long position closures rose to 18.1%, indicating growing bear pressure. This metric shows forced selling as traders exit leveraged bullish bets.
Source: Axel Adler Jr
Additionally, the history of liquidations shows comparable rises with the 2022 and 2024 steep corrections. As a result, even when technical signs become optimistic, traders continue to exercise caution. According to Adler, this deleveraging might eventually help another long-term boom by resetting market imbalances.
Furthermore, the price history of Bitcoin has periods of increased volatility that are frequently accompanied by waves of liquidation. Although the current indicators are positive, they also highlight the possibility of short-term declines.
