Dreams involving hair can often symbolize identity, self-esteem, or feelings of vulnerability. In your dream, the missing hair may represent a sense of loss or insecurity about how you are perceived by others. The mushrooms growing out of your head could suggest that there are unwanted thoughts, feelings, or situations in your life that are thriving in a place where they shouldn't be.

The act of picking off the mushrooms may indicate your desire to remove these negative aspects, but the long root and the resulting blood could symbolize the deep-seated issues that are causing you distress. Blood in dreams often signifies a loss of vitality or emotional trauma, and the pooling blood may represent feelings of helplessness or being overwhelmed.

Covering your head with paper towels that soak through suggests that your attempts to manage or conceal these feelings are not working; you may need to address the underlying issues more directly rather than trying to hide them.

Overall, this dream may be urging you to confront and process your feelings before they become too overwhelming. Consider reflecting on areas in your life where you may feel exposed or vulnerable, and think about seeking support to help you navigate these emotions.