STX, the native token of the Bitcoin-focused Stacks layer 1 smart contract platform, has been causing a stir in the cryptocurrency market with a remarkable 400% rally since October 2023.
On February 22, STX trading volume surged an astounding 2,600% over the same period, reaching $437.6 million. STX’s performance has outshined Bitcoin’s 90% increase since October 15, 2023, and according to Messari, STX even outperformed Bitcoin in 2023 with a 600% year-on-year increase.
Bitcoin layer-2 projects have been gaining significant interest this year, not only due to spot Bitcoin ETFs, which now manage over $10 billion in assets, but also because of their focus on Bitcoin Ordinals, which currently boast a $2.5 billion market cap.
Stacks is a layer 2 network for Bitcoin that aims to support core decentralized finance (DeFi) features similar to other layer 1 ecosystems like the Ethereum network and Solana.
Stacks allows users to create custom cryptocurrencies similar to Ethereum’s ERC-20 tokens, stablecoins, wrapped Bitcoin, and nonfungible tokens. It also supports a decentralized exchange (DEX) and a liquid staking protocol (LSP).
The growing interest in Bitcoin layer 2s stems from their ability to strengthen the network’s value proposition by enabling it to handle more transactions. The popularity of the BRC-20 token standard and Ordinals inscriptions has been credited with increasing network activity on the Bitcoin network.
The rally in STX price coincides with the upcoming Nakamoto Release update, which is expected to take place before the Bitcoin halving in April. This upgrade aims to accelerate transactions and introduce a new Bitcoin-pegged token (sBTC), among other improvements. sBTC will be utilized by Bitcoin holders who want to participate in smart contracts and developers who want to build applications on Bitcoin.
These developments have generated greater interest in Stacks. Data from crypto analytics firm Artemis reveals that the number of daily active addresses on Stacks has surged from 961 to over 4,000 in the past 90 days. Similarly, daily transactions have increased from around 8,340 to 33,000 over the same period.
Another metric used to measure 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.
The surge in TVL indicates a significant influx of capital into the Stacks DeFi ecosystem, highlighting investor confidence and active participation in DApps.
The rise in Bitcoin’s price has also fueled the rally in STX. The excitement surrounding spot Bitcoin ETFs in late 2023 and their eventual approval by the U.S. Securities and Exchange Commission in January 2023 propelled BTC price to a two-year high of $49,000. Similarly, STX reached $2.06, its highest price in nearly two years.
More recently, the increasing inflow of Bitcoin ETFs has been driving a strong rally in BTC price, which reached as high as $53,000 on February 20. STX, once again, followed suit, gaining 85% in the last 30 days to hit a new high of $2.90.
With traders anticipating further rises in Bitcoin price in 2024 and the growing traction of layer 2 Bitcoin development, Stacks may solidify its position as one of the leading projects in the layer 2 Bitcoin sector.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and exercise caution when making investment decisions.