Bitcoin Faces Volatility as Price Targets $42,000
Bitcoin (BTC) is experiencing sharp volatility as the new week begins, with the focus on whether the cryptocurrency can sustain its price action at $42,000. After weekend gains of over 10%, traders are uncertain about the next move for BTC.
While a rise to $40,000 was expected, the question now is whether this recent move represents the start of a new trend or a bull trap. Market appraisals differ, with both bullish and bearish perspectives vying for validation.
Support and Resistance Levels After Recent Price Performance
Cointelegraph takes a look at the most significant support and resistance levels currently in play, following recent BTC price performance that has reshaped the market landscape.
According to data from Cointelegraph Markets Pro and TradingView, BTC/USD is currently trading at around $41,600, after reaching 19-month highs of $42,160 earlier in the day.
Material Indicators, a trading resource, analyzed order book liquidity and found that the strongest concentration of bids was at $41,500 and $40,700. This suggests that there is little significant sell pressure above the current spot price, as large-volume traders have already sold into the rally.
Material Indicators explained, “As I’ve been saying all week, I thought Bitcoin would continue to climb as long as whales could keep attracting bid liquidity to the range, or they lured enough to distribute into. They succeeded in attracting over $120M to the active trading range so wasn’t surprised to wake up to BTC taking out $42k, before the selling began.”
Selling slowed down once buy walls had disappeared, but $86 million was still sold off within just 30 minutes. However, a new $30 million block of bid liquidity has recently appeared, potentially continuing the game.
Statistics from CoinGlass showed that $42,420 is an area of interest for derivatives on Binance, the largest global exchange, after the Wall Street open on December 4.
Long-Term BTC Price Levels Remain Relevant
Despite the volatility, historical BTC price levels still hold psychological significance. Scott Melker, a trader, analyst, and podcast host, emphasized the importance of these levels.
Melker stated, “$42K is historically one of the most important levels for Bitcoin.” He provided a chart that highlighted key price points that have acted as magnets since their creation, some over two years ago.
For example, $42,000 represents the initial rejection price from early 2021 when BTC/USD surged due to Tesla adding Bitcoin to its balance sheet. Melker explained, “It was the dead top of the ‘Tesla’ pump in January of 2021 and acted as both support and resistance countless times after.”
Other important support and resistance levels on the chart include $31,860, $28,050, and $25,200, which have been significant since their creation in 2021. On the upside, $48,240, $51,790, and the all-time high of $69,000 are psychologically relevant resistance levels.
Please note that this article does not provide investment advice or recommendations. Investing and trading involve risk, and readers should conduct their own research before making any decisions.
