STX, the native token of Stacks, a smart contract platform built on the Bitcoin blockchain, has been making significant waves in the cryptocurrency market. Since October 2023, it has experienced a remarkable rally of 400%. During the same period, trading volume for STX has surged by an astounding 2,600% to reach $437.6 million on February 22. This performance has outpaced Bitcoin’s increase of 90% since October 15, 2023. In fact, according to Messari, STX has even outperformed Bitcoin in 2023 with a year-on-year increase of 600%.
The growing interest in Bitcoin layer-2 projects this year can be attributed not only to the rise of spot Bitcoin ETFs, which now manage over $10 billion in assets, but also to their focus on Bitcoin Ordinals. These projects already boast a market capitalization of $2.5 billion.
Stacks serves as a layer-2 network for Bitcoin and is designed to support decentralized finance (DeFi) features similar to those found in other layer-1 ecosystems like Ethereum and Solana. It enables users to issue their own custom cryptocurrencies, stablecoins, wrapped Bitcoin, and non-fungible tokens. Stacks also provides support for a decentralized exchange (DEX) and a liquid staking protocol (LSP).
The increasing interest in Bitcoin layer-2 solutions stems from their ability to enhance the network’s value proposition and currency by enabling it to process a higher volume of transactions. The popularity of the BRC-20 token standard and Ordinals inscriptions has contributed to the rise in network activity on the Bitcoin blockchain.
The recent rally in the price of STX can be attributed to the upcoming Nakamoto Release, an update expected to occur before the Bitcoin halving in April. This upgrade is anticipated to accelerate transaction speeds and introduce a new Bitcoin-pegged token called sBTC, among other improvements. sBTC will be utilized by Bitcoin holders who wish to participate in smart contracts and developers who want to build applications on the Bitcoin blockchain.
These developments have resulted in increased user interest in Stacks. Data from crypto analytics firm Artemis reveals that the number of daily active addresses on the platform has risen from 961 to over 4,000 in the last 90 days. Similarly, daily transactions have surged from approximately 8,340 to 33,000 during the same period.
Another metric used to gauge user interest and trust in a blockchain network is the total value locked (TVL) on the platform. According to data from DefiLlama, Stacks’ TVL has soared by 830% from $12.35 million on October 15, 2023, to $114.87 million on February 22. This surge in TVL indicates a significant influx of capital into the Stacks DeFi ecosystem, highlighting investor confidence and active participation in decentralized applications (DApps).
The rally in the price of STX can also be attributed to the bullish trend of Bitcoin. The excitement surrounding spot Bitcoin ETFs in late 2023, coupled with the eventual approval by the U.S. Securities and Exchange Commission in January 2023, led to a surge in the price of BTC, reaching a two-year high of $49,000. In parallel, STX also experienced a rise, reaching $2.06, its highest price in almost two years.
More recently, the inflow of Bitcoin ETF investments has fueled a strong rally in the price of BTC, which reached as high as $53,000 on February 20. STX has followed in Bitcoin’s footsteps, gaining 85% in the last 30 days to reach a new high of $2.90.
With traders anticipating further price increases for Bitcoin in 2024 and the growing traction of layer-2 Bitcoin development, Stacks is poised to solidify its position as one of the leading projects in the layer-2 Bitcoin sector.
It is important to note that this article does not provide investment advice or recommendations. Investing and trading involve risks, and readers should conduct their own research before making any decisions.