The Bitcoin Power of 3 pattern indicates a potential rise to $126,000 following a major $922 million liquidation event that reset leveraged positions, with key resistance levels needing to turn into support for a sustained bullish trend.
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Bitcoin’s Power of 3 pattern reveals accumulation, manipulation, and distribution phases targeting $126,000.
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A $922 million liquidation event significantly reduced leveraged positions, improving recovery prospects.
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Crucial resistance levels at $115,300 and $116,800 must flip to support, with $120,000 acting as a strong price magnet.
Bitcoin’s Power of 3 pattern targets $126K after a $922M liquidation reset. Clear key resistance levels for bullish momentum. Stay informed with COINOTAG.
What is Bitcoin’s Power of 3 Pattern and How Does It Signal a $126,000 Target?
Bitcoin’s Power of 3 pattern is a market structure comprising Accumulation, Manipulation, and Distribution phases that reflect institutional trading behavior. This pattern suggests BTC could reach a technical target of $126,000 if it reclaims and holds key support levels, signaling a potential bull market resumption.
How Does the Accumulation, Manipulation, and Distribution (AMD) Structure Work?
The AMD structure begins with Accumulation, where BTC stabilizes between $115,300 and $119,500, forming a strong base. This is followed by Manipulation, a sharp price drop to around $112,000 designed to shake out weak hands. Finally, Distribution occurs if BTC reclaims $115,300, potentially driving price toward $126,000, aligning with recent resistance clusters.
How Did the $922 Million Liquidation Event Impact Bitcoin’s Market Sentiment?
A significant liquidation event totaling $922 million on August 1 reset leveraged positions, reducing Bitcoin futures open interest from $88 billion to $79 billion. This deleveraging is historically bullish, as it removes excess risk and creates space for new long positions, improving the outlook for a market recovery.
What Does Negative Funding Rate Indicate About Market Bias?
Funding rates on major platforms like Binance, BitMEX, and Deribit have turned negative, meaning shorts pay longs to maintain positions. This unusual condition signals heavy bearish retail sentiment, which, when combined with recent liquidations, suggests a contrarian setup favoring a bullish reversal.
Why Are $115,300, $116,800, and $120,000 Key Levels for Bitcoin?
Bitcoin must clear resistance at $115,300 and $116,800 to confirm a bullish trend. The $120,000 level acts as a strong price magnet, supported by dense liquidation clusters. Breaking above these levels could trigger momentum toward new highs, while a retest of $110,000 remains a possibility.
What Does Binance’s Net Taker Volume Reveal About Market Dynamics?
Binance’s cumulative net taker volume recently dropped below -$1.5 billion, indicating aggressive sell-side pressure and forced liquidation of late long positions. This capitulation phase often marks a local bottom, presenting accumulation opportunities for strategic traders.
How Does Bitcoin’s Absorption of the Fair Value Gap Affect Price Action?
Bitcoin absorbed a high time frame fair value gap between $112,000 and $115,200, coinciding with the previous all-time high. This absorption, combined with a rebound from $112,000 support, indicates seller exhaustion and strengthens the case for a bullish reversal.
Bitcoin four-hour chart. Source: Cointelegraph/TradingView
Bitcoin one-day chart. Source: Cointelegraph/TradingView
Total crypto liquidations chart. Source: CoinGlass
Bitcoin cumulative net taker volume on Binance. Source: CryptoQuant
Bitcoin four-hour analysis by Michaël van de Poppe. Source: X
| Key Resistance Level | Price | Significance |
|---|---|---|
| $115,300 | $115,300 | Must flip from resistance to support |
| $116,800 | $116,800 | Critical resistance before $120K target |
| $120,000 | $120,000 | Strong price magnet with dense liquidation clusters |
Frequently Asked Questions
What phases make up Bitcoin’s Power of 3 pattern?
The pattern consists of Accumulation, where price stabilizes; Manipulation, a shakeout phase; and Distribution, where price targets higher levels like $126,000.
How does a liquidation event influence Bitcoin’s market outlook?
Liquidations reduce excessive leverage, often signaling the end of bearish momentum and creating conditions favorable for price recovery.
Key Takeaways
- Power of 3 pattern: Highlights institutional trading phases predicting a $126,000 target.
- Leverage reset: $922 million liquidation event reduces risk and supports bullish momentum.
- Critical levels: $115,300 and $116,800 must become support to unlock $120,000 price potential.
Conclusion
Bitcoin’s current market dynamics, marked by the Power of 3 pattern and a significant leverage reset, suggest a promising path toward $126,000. Clearing key resistance levels is essential for sustained bullish momentum. Traders should monitor these developments closely as the market prepares for potential upside movement.
