STX, the native token of the Stacks layer 1 smart contract platform focused on Bitcoin, has been causing a stir in the cryptocurrency market with a remarkable 400% rally since October 2023.
Trading volume for STX has surged by an astonishing 2,600% over the same period, reaching $437.6 million on Feb. 22. STX’s performance has outpaced Bitcoin’s 90% increase since Oct. 15, 2023, and according to Messari, STX has even outperformed Bitcoin in 2023 with a 600% year-on-year increase.
Bitcoin layer-2 projects have been garnering increased interest this year, not just due to the popularity of spot Bitcoin ETFs, which now manage over $10 billion in assets, but also because of their focus on Bitcoin Ordinals, which already hold a market capitalization of $2.5 billion.
Stacks is a layer 2 network for Bitcoin that aims to support decentralized finance (DeFi) features similar to other layer 1 ecosystems like Ethereum and Solana. Stacks allows users to create custom cryptocurrencies, stablecoins, wrapped Bitcoin, and nonfungible tokens. It also features a decentralized exchange (DEX) and a liquid staking protocol (LSP).
Bitcoin layer 2s have gained interest for their ability to strengthen the network’s value proposition and increase transaction processing capacity. The growing activity on the Bitcoin network is often attributed to the popularity of the BRC-20 token standard and Ordinals inscriptions.
The recent rally in the price of STX coincides with the upcoming Nakamoto Release update, expected to take place before the Bitcoin halving in April. This update is anticipated to enhance transaction speed and introduce a new Bitcoin-pegged token (sBTC), among other improvements. sBTC will be used by Bitcoin holders looking to engage in smart contracts and developers seeking to build applications on Bitcoin.
These developments have generated increased interest in Stacks, with data from crypto analytics firm Artemis showing a significant increase in daily active addresses and daily transactions on the platform. The total value locked (TVL) on Stacks has also seen a substantial 830% increase, indicating a significant influx of capital into the Stacks DeFi ecosystem and demonstrating investor confidence and active participation in decentralized applications (DApps).
The rally in STX can be attributed to the upward trend in Bitcoin, driven by excitement surrounding spot Bitcoin ETFs in late 2023 and the subsequent approval by the U.S. Securities and Exchange Commission in January 2023. Bitcoin’s price reached a two-year high of $49,000, while STX climbed to $2.06, its highest price in nearly two years.
The recent surge in Bitcoin ETF inflows has propelled the BTC price to reach as high as $53,000 on Feb. 20, and STX has followed suit, 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.
Please note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should conduct their own research before making any decisions.