Bitcoin BTC Price Retreats But Key Support Still in Play For Bulls

The bitcoin price has endured a steep 7.5% pullback in recent days after its parabolic rally finally lost momentum last week. BTC fell from highs around $44.7k down to a low of $39.9k over the weekend, sending shockwaves through the crypto market. However, the correction appears to have been a healthy one so far, stopping right around a key support zone according to technical analysis.

Keypoints

• Bitcoin price dropped below $40k support level, but has bounced back above $41k currently
• Key support level to watch is $37k – $38k zone according to analyst Ali Martinez where over 500k BTC are held
• Resistance levels to watch are $43.8k and $46.4k which could halt further BTC upside
• Bitcoin price pullback was expected after overextended gains recently, stopped at key support per Bollinger Bands
• Unclear if large spot traders accumulating or just playing “buy the dip, sell the rip” strategy for now

As John Bollinger, creator of the Bollinger Bands indicator noted, this $40k zone is exactly where bitcoin’s price was “supposed” to stop based on volatility bands. It signaled the uptrend was incredibly overextended and due for a cooldown. Crypto markets had become exceedingly frothy, with unchecked euphoria fueling predictions of $100k bitcoin by year’s end. The pullback offers a reset for more sustainable gains going forward.

The air is getting a bit thin up here, but all we see as of now are signs of strength. We are outside both the daily and weekly BBs with no divergences. The last controlling formation was the 2 bar reversal at the middle BB completed on 21 Nov. $BTCUSDhttps://t.co/B4ZU3vpTvV

— John Bollinger (@bbands) December 5, 2023

Bitcoin remains above $41k as of this writing, fighting to hold onto the psychologically-important level. Now traders are watching to see whether $37k – $38k will hold as the next key support zone. According to analyst Ali Martinez, this wide band between $37,150 and $38,360 is backed by over 500,000 BTC held across more than 1.5 million addresses.

So in the event selling pressure continues and bitcoin breaks below $40k, there is a solid floor of buyers under $38k ready to absorb the dip. These are strong hands that have continually bought up supply during previous corrections in 2022.

However, based on order book data from Binance and other spot exchanges, it remains unclear whether large traders are legitimately starting to accumulate at these levels or just playing a rangebound strategy of “buying the dip and selling the rip.”

Key resistance levels are further overhead around $43,850 and up to $46,400 based on historical volume profiles. Martinez notes these resistance “walls” could halt any renewed bitcoin uptrend in the near term. For now, bitcoin price action seems rangebound between support around $37k and resistance toward $46k.

As we move into the end of December, volatility could easily spike again around key macro events. The Federal Reserve’s interest rate decision on December 14th has investors on edge, while the long-awaited approval of a Bitcoin ETF in early 2023 could quickly send prices surging higher once again.

After its healthy pullback, bitcoin appears to have found a temporary bottoming zone for now. But uncertainty persists in volatile crypto markets. Price action is expected to remain choppy through year’s end, with bulls and bears both laser focused on the critical support and resistance levels that could determine the next major trending move.