Bitcoin Bounce Fades as Q1 Losses Deepen; Downside Risk Returns

Bitcoin is trading around $68,700, down nearly 22% year to date and on pace for its weakest first quarter since 2018. After starting the year near $87,700, BTC has shed almost $20,000 in just a few weeks, putting pressure on the broader crypto market. A 9% rebound between February 12 and February 15 lifted price briefly but may have increased downside risk: futures open interest jumped from roughly $19.6 billion to $21.47 billion and funding turned strongly positive as traders piled into longs.

The rally unfolded inside a bear-flag continuation pattern, and a hidden bearish divergence on the 12‑hour chart—price making a lower high while RSI printed a higher high—adds to the caution. Net Unrealized Profit/Loss surged by roughly 90% over several days, and similar profit spikes in early February preceded a 14% drop; renewed profit-taking could intensify selling.

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