Bitcoin (BTC-USD) has managed to hold steady near the symbolic $50,000 mark, defying fears that the world’s biggest cryptocurrency could rapidly retreat after reaching the price level.
Bitcoin hit a 3-month high above $50,000 on Monday and was still just below that level by Tuesday morning. The cryptocurrency was down 0.9% to $49,744 by 9am in London.
Analysts had feared bitcoin could fall closer to support levels around $47,000 after breaching the $50,000 mark.
Experts said the price resilience was being supported by improvements in the underlying network of bitcoin.
“The hash rate has displayed a significant turnaround from its July lows,” said Naeem Aslam, chief market analyst at Avatrade. “Hash rate is basically an indicator of how much computational power is being pumped in to improve the Bitcoin network.”
Bitcoin operates through a decentralised network of computers. People are incentivised to contribute computing power by code that rewards the work with newly-minted bitcoins.
The levels of computing power within the bitcoin network is measured through the so-called “hash rate.” Computer operators who do the work are known as “miners,” due to the fact their work is rewarded with tokens. The lower the hash rate, the slower the network and the more it is vulnerable to attack.
China launched a crackdown on cryptocurrency companies that included miners in late May. China had long been the centre of the bitcoin mining ecosystem and Bitcoin’s hash rate fell to a two-year low in July in response to the crackdown.
Since then, miners have moved operations away from China, while those with operations outside of the country have scaled up to meet demand. The hash rate has risen almost 50% since the lows seen in July but remains around 30% below the all-time high reached in May, according to estimates from industry data provider Blockchain.
“An improvement in this indicator shows that the sector is rapidly adjusting after clampdowns seen earlier in China,” said Aslam.
Elsewhere, the broader cryptocurrency market was little changed on Tuesday. Data from CoinMarketCap.com showed the market value of the crypto ecosystem had risen by just 0.3% over the last 24 hours — an unusually small move for the usually volatile asset class. Crypto’s market cap stood at $2.16tn (£1.58tn) on Tuesday morning.
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