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The price of Bitcoin has risen more than 4% since February 19, helping it recover above $68,200. This recovery provided some temporary relief after weeks of weakness. However, technical and on-chain signals now show that Bitcoin may approach its most dangerous level in 2026.
A combination of bearish chart structure, large supply pool below price, and elevated leverage risks suggest that a deeper correction could begin soon.
Show up 8 hour chart for Bitcoin Currently, the head and shoulders model. This is a bearish reversal structure that forms when the price forms three peaks, with the middle peak higher than the rest. This indicates weak purchasing power and high selling pressure.
At the same time, Bitcoin formed a hidden bearish divergence between February 6 and February 20, and during this period, the price of Bitcoin formed a lower high, that is, the rebound was not able to fully recover the previous high.
But the Relative Strength Index or RSI formed a higher high.
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The Relative Strength Index (RSI) measures the importance of buying and selling on a scale from 0 to 100. When the RSI rises, but the price fails to rise by the same percentage, this indicates that the buying power is weakened, and this pattern often appears before price decreases or retracements.
The biggest risk now comes from… Basic cost levels on the chain for BitcoinUTXO, or URPD, realization price distribution data shows that the largest pool of supply is located above $66,800, and this level represents 3.17% of the total circulating supply of Bitcoin.
Another major rally is at $65,636, holding an additional 1.38% of the supply.
These levels are important because they reflect the prices at which many investors buy Bitcoin. If Bitcoin falls below these levels, holders may begin to sell to avoid losses, quickly accelerating the decline in price.
Together, these rallies account for more than 4.5% of Bitcoin’s concentrated supply directly below the current price, creating a high-risk zone just below Bitcoin’s support. This explains the reason for the larger price notice.
If Bitcoin closes below this zone, the strength of the head and shoulders pattern may increase.
High leverage and index fund flows increase liquidation risk
Derivatives data shows rising risks from liquidation as Bitcoin rebounds. Open interest, which measures the total value of active futures positions, rose from $19.54 billion on Feb. 19 to about $20.71 billion now, during the rally.
This indicates that more traders are entering leveraged positions during the recovery.
At the same time, the financing rates have become positive. Funding rates are payments between traders in long and short positions. Positive funding means that more traders are betting on rising prices. This creates a dangerous situation.
If it starts The price of Bitcoin fellThese long leveraged positions can be forced to close. This causes a squeeze on long positions, as optimistic traders are forced to exit their positions. Such a forced exit could create a wave of liquidation, adding more selling pressure and further accelerating the price decline.
Institutional sentiment also remains weak. Bitcoin spot ETFs have now recorded five consecutive weeks of net fund flows. This shows that institutional investors are still withdrawing their capital instead of accumulating it.
This reduces support during falling prices.
The price of Bitcoin faces a critical test under institutional resistance
Bitcoin also remains below the monthly volume weighted average price, or VWAP, which is near $70,000. VWAP represents the volume weighted average price. Monthly VWAP is widely used as an indicator of the cost of the underlying business. See more.
Bitcoin trading below VWAP means that the average institutional position is currently in loss. This often causes institutions to reduce their exposure or avoid new purchases, which explains the decreased interest in index funds.
A return above $70,000 indicates renewed institutional strength. But as long as Bitcoin remains below this level, recovery attempts may be limited, and the overall structure remains bearish.
On the side, identify the first major support of Bitcoin near $67,300. If this level is broken, the next support appears at $66,500, followed by $65,300. These levels align closely with the key presentation areas mentioned earlier. Failure to hold these levels could trigger a larger head and shoulders pattern of the low near the neck at $60-800.
A setback could therefore lead to a downside target that exceeds 7.5%, which indicates a price target of $56,000, in the near-medium term.
Specifying on the upside, Bitcoin should claim the level of $68-200 to stabilize its short-term structure. However, a full recovery requires the VWAP level to be restored to $70,000.
