Bitcoin Faces Resistance at $70K Again; A Short Squeeze Could Be on the Horizon

Bitcoin's price has struggled to surpass the $70,000 mark, facing rejection twice in a week amid increased volatility. Despite the challenges, analysts suggest that a short squeeze may be forming, possibly benefiting long-term holders. This article explores market conditions, ETF flows, and the potential for a price rebound.

Key Takeaways

Bitcoin attempted to break $70K twice but was met with rejection and high volatility.
Analysts indicate a potential short squeeze may be developing, despite market uncertainty.
Recent trends show positive Bitcoin Spot ETF netflows, a sign of potential recovery.
The supply of Bitcoin in loss stands at 46.3%, indicating market stress.
Traders should approach the current market with caution while observing signs of a possible price increase.

Market Analysis: Bitcoin's Resistance at $70K

Bitcoin [BTC] has made two attempts to exceed the $70,000 mark within a week, both times facing rejection along with increased market volatility. A recent report from AMBCrypto suggests that a short squeeze could be on the verge of occurring, despite ongoing geopolitical tensions that are impacting the market.

Currently, volatility is at its highest since 2022, with short-term holders continuing to incur losses. This situation could indicate a forthcoming exhaustion among sellers.

Positive Signs for Long-term Bitcoin Investors

Bitcoin ETF Netflow Source: Axel Adler Jr

According to crypto analyst Axel Adler Jr., the first five weeks of 2026 experienced consistent outflows from Bitcoin Spot ETFs. However, at the time of writing, those flows have shifted back into positive numbers, which could signal a favorable turn for the market. Nonetheless, one week's positive trend might not be enough to shift the overall market dynamics significantly.

Bitcoin Supply in Loss Source: Axel Adler Jr

The supply of Bitcoin held at a loss has reached 46.3%, placing it in the range that historically indicates substantial market stress. Indicators suggest it could take weeks or even months for this figure to rise to 60% or higher, which has typically correlated with the lowest points in previous bear markets. A consistent positive flow into ETFs, along with a decline in the supply in loss, would signify a potential market recovery.

Why Volatility Shouldn't Deter Short-term Buyers

While macroeconomic conditions appear tumultuous, Bitcoin has successfully held the $60,000 level twice in the last month. Recently, it has shown signs of climbing, establishing higher lows as it approaches the $70,000 resistance.

Data from Glassnode indicates that this resistance level is primarily influenced by profit-taking, highlighting its fragility.

Bitcoin Taker Buy Sell Ratio Source: CryptoQuant

On February 25, the 7-day moving average of the taker buy/sell ratio exceeded 1 and has maintained that average for most of the week. While this is largely a positive development, the situation remains delicate.

Furthermore, rising Open Interest suggests that speculators are anticipating a breakout past the $70,000 mark, though that has yet to materialize.

Bitcoin Liquidation Map Source: CoinGlass

Notably, there seems to be a cluster of high-leverage long liquidations between $65,200 and $67,000. However, the overall short liquidation leverage remains substantially larger than that of long liquidations. This dynamic means that a significant upward price movement could trigger short liquidation events, setting the stage for a classic short squeeze.

Based on the current evidence, an upward price movement appears plausible; however, traders should continue to exercise caution.

Conclusion

As Bitcoin grapples with significant resistance at the $70,000 threshold, the mixed market signals create both challenges and opportunities. While the potential for a short squeeze exists, caution in trading strategies is still advised as the market navigates through uncertainty.