Bitcoin Layer 2 Tokens Outperform BTC After Halving

Since Bitcoin's halving event, Bitcoin layer 2 solution tokens have outperformed BTC, surging by 5% to 20%. Stacks (STX) has been a top performer, increasing almost 20% to $2.87, while Bitcoin has only risen 4.5%. Other layer 2 tokens like Elastos' ELA and SatoshiVM's SAVM have also gained.

Bitcoin Layer 2 Tokens Surge, Outperforming Bitcoin Post-Halving

Following the highly anticipated halving of the Bitcoin mining reward, tokens associated with Bitcoin layer 2 solutions have demonstrated exceptional performance, outpacing Bitcoin in terms of market growth.

Layering on Success

According to data from CoinGecko, the combined market capitalization of Bitcoin layer 2 solutions has ascended to $4.3 billion, representing a notable 5.6% surge within the past 24 hours. This growth is accompanied by a significant trading volume of $184 million.

Stacks (STX) Dominates

Amongst the top-performing cryptocurrencies in the wake of the halving event, Stacks (STX) has emerged as a standout performer. The STX token has experienced an impressive surge of nearly 20%, propelling its value to $2.87.

In contrast, Bitcoin has recorded a more modest growth of 4.5% since the halving event, currently trading at $66,046. This increase represents a 1.7% gain over the past 24 hours, while over the past week, Bitcoin has declined by 0.8%.

Alternate Solutions Thrive

Other Bitcoin layer 2 tokens have also witnessed significant gains, including Elastos' ELA token and SatoshiVM's SAVM. These tokens have surged by 11% and 5%, respectively, since the halving event.

Exception to the Rule

While most altcoins have experienced modest daily gains, TON stands out as an exception. Despite Tether's recent announcement of expanding to the TON blockchain, the TON token has taken a significant double-digit hit.

Addressing Blockchain Limitations

Bitcoin layer 2 solutions address fundamental limitations associated with the Bitcoin blockchain, particularly in terms of scalability and transaction speed. These projects operate on the Bitcoin blockchain, offering scalability by processing transactions outside of the main chain.

Soaring Transaction Fees

Coinciding with the halving event and the launch of the Runes protocol on April 20, Bitcoin transaction fees reached an average of $128.45, as per data from ycharts. This figure represents a six-fold increase compared to the average fee rate on the preceding day and approximately double the previous record set three years prior.

Runes-Driven Surge

The surge in transaction fees can be attributed to the introduction of the Runes protocol, which allows users to create and mint tokens on the Bitcoin blockchain. Speculators flocked to mint tokens and trade meme coins, leading to a spike in transaction activity and subsequent rise in transaction costs.

Fees Subside

Transaction fees have since declined, dropping to $34.8 on April 21. According to data from Ord.io, the total number of Runes inscriptions on the Bitcoin blockchain has already surpassed 3,700.

Conclusion

Post-halving, Bitcoin layer 2 tokens have demonstrated exceptional growth, underscoring their potential to resolve scalability and speed challenges plaguing the Bitcoin blockchain. While transaction fees surged following the introduction of the Runes protocol, fees have since moderated, suggesting a return to normalcy. The performance of these tokens highlights the ongoing evolution of the Bitcoin ecosystem and the growing importance of layer 2 solutions.