“Bitcoin On-Chain Activity Rises Hinting At A Bull Run?“
The price of Bitcoin is currently hovering around $34,000, indicating potential bullish momentum. However, analysts are questioning whether there are enough signs pointing to an upward trend or if BTC will drop back to $20,000. Currently, BTC is trading at $34,150 with sideways movement in the last 24 hours. The cryptocurrency saw a 15% profit last week and remains a top performer by market cap.
Data from the analytics platform mempool.space shows an increase in on-chain activity on the Bitcoin network. This spike occurred in February 2023 when BTC transactions rose above 50 Mega Virtual bytes (MvB). On-chain activity measures the size of transactions and blocks on the BTC network. Each time there is a rise in the price of BTC, there is a surge of activity leading to a rally. This suggests that the ecosystem is growing, attracting more users, and preparing for a significant rally like in previous years.
BTC DeFi Makes A Difference In Key BTC Metric?
Many believe that with the implementation of non-fungible tokens (NFTs) in the BTC ecosystem, transaction activity can no longer be solely attributed to a new bullish cycle. To explore this further, we spoke with Mark Hendrickson, General Manager at Trust Machines, a company working on a Bitcoin DeFi wallet.
“Leather” – A Web3 Wallet for Bitcoin
Hendrickson describes “Leather” as a web3 wallet built around Bitcoin technologies and applications. It aims to provide a user-friendly experience for connecting to Bitcoin-based applications and performing similar actions as on smart contract-enabled L1 chains. Leather also facilitates liquidity movement between L1 and L2 networks seamlessly.
Bitcoin DeFi Ecosystem and Leather’s Role
Bitcoin-based DeFi primarily takes place on Bitcoin itself (L1) through primitives like Ordinals and fungible token standards like BRC 20. Additionally, Bitcoin-related DeFi occurs on Layer2 networks like Stacks with smart contract functionality. Leather’s role is to extend what can be done with Bitcoin without fundamentally changing it, respecting the security profile and previous work on Bitcoin.
Network Activity and Ordinals
Ordinals, an innovation based on taproot introduced recently, has had a significant impact on Bitcoin’s network activity and fee rates. It allows storing data on-chain beyond simple transactions and applies these primitives to various web3 applications. While it’s difficult to pinpoint specific reasons for Bitcoin’s price increase, Ordinals has been a positive influence on network activity and interest in Bitcoin.
The Dominant Narrative in the BTC Market
The dominant narrative around Bitcoin is that it has stood the test of time compared to weaker technologies and platforms. People have returned to Bitcoin as a safe harbor due to its longevity and security. Additionally, the realization that there are more frontiers for what can be done with Bitcoin, particularly with Ordinals, has renewed enthusiasm for the cryptocurrency.
Hot Take: BTC On-Chain Activity Points to Potential Bullish Momentum
The recent increase in on-chain activity on the Bitcoin network suggests potential bullish momentum for the cryptocurrency. This rise in activity aligns with previous years when BTC experienced significant rallies. However, the implementation of NFTs and new applications in the BTC DeFi ecosystem makes it harder to predict if this year’s rally will reach similar levels. Leather, a web3 wallet built around Bitcoin technologies, aims to provide users with a robust experience for connecting to Bitcoin-based applications and facilitating liquidity movement between networks. Overall, while network activity can be influenced by various factors, Ordinals has played a positive role in driving interest in Bitcoin.
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