Bitcoin Layer 2 Coins on Fire Post Halving, as Traders Chase Profits

Following Bitcoin‘s recent halving event, coins associated with its layer-2 solutions have witnessed impressive gains, outperforming the leading cryptocurrency. This notable performance comes amid a significant increase in transaction fees on the leading blockchain, an issue that Bitcoin layer 2 solutions aim to overcome.

For context, Bitcoin layer 2 solutions refer to protocols built on top of Bitcoin’s protocol. These chains are developed to provide scalability to the Bitcoin network by processing transactions off the main blockchain. Unlike Ethereum Layer 2 solutions which mainly focus on scaling the Ethereum smart contract blockchain,  Bitcoin Layer 2 projects aim to scale and introduce programmability features to the main blockchain. 

Bitcoin Layer 2 Tokens Impressive Perfomannce

Taking the lead of the layer 2 tokens which saw a significant rise since the Bitcoin halving event is STX, the native token of  Stacks. Recent data shows that the coin has soared by nearly 20% to $2.87. The halving event reduced the per-block coin emission to 3.125 BTC from 6.25 BTC. STX’s performance is so impressive that it’s ranked among the top 25 cryptocurrencies in the past 24 hours. 

However, STX is not the only Bitcoin layer 2 coin experiencing this upward trajectory. ELA from Elastos and SAVM from SatoshiVM, have also seen notable gains of 11% and 5%, respectively since the halving. In stark contrast, Bitcoin only recorded a modest increase of about 4.7% to $66,300. 

The impressive performance of Bitcoin layer 2 tokens highlights growing investor interest in solutions that address the scalability limitations of the Bitcoin blockchain.

Increase in Bitcoin Transaction Fees 

Notably, the Layer 2 rally coincides with a significant increase in transaction fees on the Bitcoin blockchain. Following the halving, data from Glassnode shows that the average transaction fee soared to about 0.0020 BTC, the highest level since early 2018. 

The surge in the fees is likely due to the launch of a protocol called Runes which allows users to create and trade tokens on Bitcoin. The debut of this protocol sparked a frenzy of activity as speculators rushed to mint tokens and trade meme coins, causing network traffic to increase and fees to skyrocket.

The recent performance of Bitcoin Layer 2 tokens indicates that investors are increasingly looking for ways to interact with the ecosystem without being subject to the limitations of the main blockchain.