Buy the dip, sell the rip? BTC price levels to watch as Bitcoin taps $42K

Bitcoin preserves $40,000 as support and bounces higher as traders eye the impact of “institutional sized” moves on BTC price.

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Bitcoin (BTC) faces an uphill struggle to reignite its uptrend after its biggest one-day losses of 2023.

The largest cryptocurrency continues to claw back lost ground after falling to lows of $40,200 after the Dec. 10 weekly close, the latest data from Cointelegraph Markets Pro and TradingView shows.

With BTC price action taking a break from relentless gains — one which many argue was overdue — new key support and resistance levels are coming into play.

The coming days are already set to offer plenty of potential volatility triggers. United States macro data releases begin on Dec. 12, with the Federal Reserve interest rate decision and commentary from Chair Jerome Powell following a day later.

The stage is set for a showdown that may involve more than crypto markets.

Cointelegraph takes a look at some of the popular BTC price lines in the sand now on the radar for traders and analysts as Bitcoin narrowly preserves the $40,000 mark.

Bollinger Bands: BTC bounced “where it was supposed to”

While painful for late longs, the 7.5% BTC price dip which followed the weekly close offered a form of reset for frantic crypto markets.

This was needed, consensus agrees, as unchecked upside typically results in a violent reaction the longer it continues.

“Very overextended, so a pullback was due,” John Bollinger, creator of the Bollinger Bands volatility indicator, argued in a reaction on X (formerly Twitter).

Meanwhile, Bollinger warned of increasingly constrictive conditions the week prior, which could be a warning over a local top in advance.

Large Bitcoin buyers may play “buy the dip, sell the rip”

Looking at the behavior of large-volume traders, some commentators see encouraging signs after the open interest flush at the hands of the dip.

Uploading a print of BTC/USDT order book liquidity on the largest global exchange Binance overnight, trading resource Material Indicators revealed a new band of support at $38,500.

While lower than both $40,000 and this week’s bottom, Material Indicators suggested that “institutional sized” bids could now be returning — but there could be a caveat.

Accompanying analysis concluded that “it’s not yet clear whether they are legitimately starting to accumulate at these levels or just buying dips and selling rips.”

“After all, we have a Fed Rate Hike decision coming this week and # JPow’s speeches are typically good for some volatility,” it added.

Continuing on Dec. 12, popular trader Skew likewise considered the odds of manipulation among larger players.

“Seeing a bit of change in the mindset of large spot players whom were actively chasing price before,” he told X followers about the Binance order book.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.