Will Bitcoin collapse once again?

The price of Bitcoin (BTC) has recovered 3% to $106,000 from its lowest point over the weekend. However, the inability to decisively break through $106,000 has raised concerns about whether the price of BTC may witness a deeper correction in the coming days.

BTC/USD Price Chart – 4 Hours | Source: TradingView## Bitcoin May Decline Due to Weakening Buying Momentum

According to data from Glassnode, the behavior of Bitcoin investors shows a decrease in buying momentum, with a local peak potentially having formed.

The chart below shows a decline in momentum from the buyers (investors buying in the uptrend), with the RSI dropping to 20. On the other hand, there is a strong increase in the profit-taking process (investors locking in profits) as the RSI rises to 77.

"This trend often appears near a local peak, when traders begin to take profits instead of increasing their exposure."

Accumulated Bitcoin supply by group | Source: GlassnodeMeanwhile, the profitable Bitcoin supply remains high at 96%, around the price of $105,000 on June 3.

Percentage of supply in profit/loss of Bitcoin | Source: CryptoQuantA large number of holders in profit is often seen as a sign of an overheated market, typically occurring before or coinciding with corrections.

Due to the signals on this chain, the price of Bitcoin may decrease in the coming days as investors choose to take profits.

Bitcoin faces strong resistance

From a technical standpoint, the latest recovery of Bitcoin has been constrained by the supply congestion zone between $106,000 and the previous ATH around $109,000. When the price was rejected at this level on January 31, BTC dropped 27% to $78,000, indicating that the bears are fiercely defending this area.

Bitcoin bulls need to create a decisive daily closing candle in this area to maintain the recovery.

BTC/USD Chart – 1 Day | Source: TradingViewThe inability to reverse $106,000 into a support level could lead to a deeper correction, with accompanying Long position liquidations potentially dragging the price down to the psychological level of $100,000.

Data from CoinGlass shows that the sell wall has accumulated at the $106,000 level over the 24-hour timeframe, reinforcing the importance of this resistance zone.

Bitcoin liquidation chart | Source: CoinGlassVincent