Bitcoin has fallen below the $16,500 support level. BTC bulls, on the other hand, were active above the $16,200 level. The price dropped as low as $16,325 and has recently begun to rise.

A minor recovery wave occurred above the $16,500 level. The price has risen above $16,600 and the 100 hourly simple moving average. The bears, on the other hand, were active near the $16,680 level. The price corrected lower after reaching a high near $16,683.

Bitcoin price fell below the 23.6% Fib retracement level of the rise from $16,325 low to $16,683 high. It found support around the $16,500 mark.

The price is trading above the 50% Fib retracement level of the upward move from the low of $16,325 to the high of $16,683. It is also higher than the $16,500 mark and the 100 hourly simple moving average. On the upside, an immediate resistance level is near $16,600.

The first major resistance is located near $16,680. The next major resistance is around $16,800. The key breakout zone is still around $17,000. A clear break above the $17,000 resistance level could spark a new uptrend in the near term.

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Bitcoin Price Drop?

If bitcoin fails to break through the $16,650 resistance level, it may fall further. On the downside, there is immediate support near the $16,500 level.

The next major support is around $16,350. A clear break below the $16,350 support level could trigger a move towards the $16,000 level. Any further losses could push the price up to $15,500.

Former CoinDesker Brady Dale noted in a piece last week titled “Crypto will be fine” that while crypto took a beating throughout 2022, some indicators remained bullish. Notably, Bitcoin’s hashrate, or how much computational power is directed toward network security, remained stable.

“If the industry were dying, these miners should be retiring. “They aren’t,” wrote Dale. According to Blockchain.com, Bitcoin’s hashrate reached an all-time high in November.

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Bitcoin’s hashrate has steadily increased over the last year, despite the network’s token, bitcoin (BTC), losing more than two-thirds of its value. Many see this as a vote of confidence in the network’s long-term viability.

 Bitcoin Remains Bearish Below

Of course, the story is more complicated than a single statistic. According to Compass Mining’s Zack Voell (another ex-CoinDesker) in a Monday report, the bitcoin mining industry will take a beating in 2022.

Voell discovered that at least four executives of major mining firms resigned during the year, six lawsuits were filed against mining companies for reasons ranging from breach of contract to zoning rule violations, and publicly traded mining companies’ stocks were in the doldrums.

Furthermore, two mining companies, Core Scientific (CORZ) and Compute North, declared bankruptcy, while Celsius Network and BlockFi, two bankrupt crypto lending firms with sizable mining wings, will almost certainly have to restructure their operations. Marathon Digital (MARA) and Argo Blockchain (ARBK) are two other mining companies that may declare bankruptcy.

More Information: Core Scientific’s Pre-Planned Bankruptcy

The circumstances vary by company, but the main causes of the problem are bitcoin’s low price and, in many cases, poor treasury management. My colleague George Kaloudis summarised the situation by saying that in recent years, many mining companies pursued accelerated growth strategies financed by debt and other investments, while frequently choosing to keep their mined coins.

“Many miners acted too deterministically,” predicting that bitcoin would reach $100,000, according to the report. Juri Bulovic, head of mining at Foundry, a cryptocurrency mining and staking firm owned by CoinDesk’s parent company, Digital Currency Group, told CoinDesk’s Eliza Gkritsi. The situation worked well when bitcoin’s price was rising and the cost of financing expansion was low – two factors that have shifted due to macroeconomic uncertainty and rising interest rates.

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Outside firms have already stepped in to cushion losses and inject much-needed capital into the sluggish professional mining sector. Galaxy Digital agreed to a $100 million deal with Argo, crypto exchange Binance established a fund for distressed miners, and investment firm BlackRock committed $17 million to bankrupt bitcoin miner Core Scientific on Tuesday.

Although the mining industry is in peril, thanks in part to state-of-the-art mining equipment ordered and deployed during the heady days of 2021, when bitcoin hit a high of nearly $69,000, it is unlikely to be wiped off the map. Battle-tested firms have better treasury management, and new financing options are emerging, such as derivatives options from Two Prime, which could allow miners to hedge their mining risks in the same way that other commodity markets, such as oil, do.

More capitulation and bankruptcies are possible, and unprofitable miners may be shut down. However, mining will continue to exist due to the global expansion of the mining industry, the sector’s committed activist investors and supporters, and the growing importance of mining within the hydrocarbon and wider energy sectors. And the company may be stronger as a result of its recent difficulties.