When asked about the most promising track in the market, the "Bitcoin ecosystem" still has the highest voice.

Author | Joyce

Produced by | Plain Language Blockchain (ID: hellobtc)

After experiencing a major market shakeout, with the rebound of Bitcoin prices, the overall market's panic has diminished significantly.

Accompanied by the repeated collapse of altcoins, the past one or two months have been shrouded in gloom for the cryptocurrency market outside of Bitcoin, from doubts about "Is there still a bull market for altcoins?" to the voices of various professional investors leaving the market.

But no matter how fearful the market sentiment is, when asked about the most promising track in the market, the "Bitcoin ecosystem" still has the highest voice.

Especially with the recent large-scale institutional purchases of Bitcoin, the continuous increase in ETF holdings of Bitcoin, and the development of Bitcoin ecosystems such as Stacks and Fractal Bitcoin, there is a strong momentum to drive a new round of market trends.

01 Institutional Holdings and ETF

As a major holder of Bitcoin on Wall Street, MicroStrategy has been buying again recently.

According to the latest SEC filings, MicroStrategy has purchased 18,300 Bitcoins in the past month, with a total investment of about $1.11 billion at an average price of around $60,655. Currently, MicroStrategy's total Bitcoin holdings have reached 248,000, accounting for 1% of the total Bitcoin supply.

After a three-year hiatus, MicroStrategy's $1.1 billion purchase of Bitcoin is undoubtedly a shot in the arm for the cryptocurrency market, which has just shown signs of recovery.

Despite the market looking shaky in the past few months and the FUD voices of "the bull market is over," the 13F filings for the second quarter of 2024 disclosed by the SEC show that in the case of a decline in Bitcoin prices, U.S. institutions have been adding to their holdings of Bitcoin ETFs against the market trend:

According to Matt, Chief Investment Officer of Bitwise, the number of institutions holding Bitcoin ETFs increased from 965 to 1,100 in the second quarter, with over 130 institutions making their first purchases of Bitcoin ETFs, and the total amount of Bitcoin ETFs held by these institutions also increased from 18.74% to 21.15%.

Therefore, despite the market volatility and even in unclear trends, these institutions have not been scared off but continue to add to their holdings.

Chart showing the change in the amount of Bitcoin held by Bitcoin ETFs, source: Dune

02 Fractal Bitcoin

Fractal Bitcoin has been one of the most eye-catching projects in the market recently. In addition to the generous airdrop that attracted a lot of attention, Fractal Bitcoin has achieved a total computing power of over 241EH within a few days of its launch, reaching 38.1% of the total computing power of Bitcoin, demonstrating its popularity.

Fractal Bitcoin price and computing power overview, source: UniSat Explorer, September 16, 2024

Fractal Bitcoin, launched by the Unisat team, has attracted such attention as expected, as it has been deeply involved in the Bitcoin ecosystem and has received investment from top institutions such as BN.

Fractal Bitcoin is also a Layer2 solution for Bitcoin, claiming to be the "only native Bitcoin expansion solution" with a focus on stronger compatibility with Bitcoin and shared security. Without changing the original Bitcoin code, it improves transaction speed, increasing the transaction confirmation time to 30 seconds, which is more than 20 times faster than the at least 10 minutes on the Bitcoin mainnet.

Regarding the differences between Fractal Bitcoin and other Layer2 and side chains, according to its founder, "If other L2 and side chains are like building another high-speed highway, then Fractal can build countless high-speed highways parallel to the Bitcoin mainnet. Each road can be used to expand the Bitcoin mainnet or to expand another road."

Of course, there are many solutions for Bitcoin scalability, and the ultimate goal is to maximize the sharing of Bitcoin's security while greatly increasing TPS, just like the goal Fractal Bitcoin aims to achieve, but there are almost no real implementations at the moment.

Since the explosion of the Bitcoin ecosystem, the Layer2 track has suddenly been crowded with various players. In addition to the original players such as Stacks and RSK, there are new Layer2 players such as RGB++, BEVM, and Merlin, which have entered the competition. It remains to be seen who can truly carry the banner of the Bitcoin ecosystem Layer2, bringing DeFi, GameFi, NFT, and a massive amount of dormant Bitcoin into the entire cryptocurrency liquidity pool.

03 Stacks Nakamoto Upgrade

As the most well-known Layer2 in the Bitcoin ecosystem, Stacks welcomed the Nakamoto upgrade on August 28.

For Stacks, this upgrade is significant for four main reasons:

1) Halving of STX production: After the Nakamoto upgrade, Stacks' production will decrease from a reward of 1,000 STX per Bitcoin block to 500 STX, greatly reducing the inflationary pressure on STX.

2) Improvement of TPS by over 60 times: Through this hard fork, Stacks' block production is decoupled from Bitcoin's block time, reducing the block confirmation time from over 10 minutes to 10 seconds, increasing TPS by over 60 times.

3) Better security: After the Nakamoto upgrade, the new consensus mechanism will write the historical data of the Stacks chain into Bitcoin blocks. Without changing the Bitcoin block data, the data of the Stacks chain cannot be tampered with, further enhancing the security of the Stacks chain.

4) Decentralized anchored coin sBTC launch: About a month after the upgrade, sBTC, the first fully decentralized Bitcoin-anchored coin, will be launched. It is open for participation without permission, making it more attractive to Bitcoin whales.

With the completion of the Stacks Nakamoto upgrade, the battle for Bitcoin's Layer2 will become more intense. After all, the security of the Stacks main chain has been tested by the market for a considerable period of time, and after the upgrade, the security has been greatly enhanced, and the optimization of TPS is also significant.

In addition, Stacks has high recognition in Europe and the United States, and it is the first SEC-compliant token project. Its ecosystem development level is also the best among various Layer2 solutions, and it already has a certain first-mover advantage, making it a heavyweight player in the battle for Bitcoin Layer2.

04 Conclusion

Of course, in addition to these, there have been many other recent developments in the Bitcoin ecosystem, such as the launch of the Babylon mainnet at the end of August, which opened for staking and reached the staking limit of 1,000 BTC in just three hours. The market attention for the anticipated airdrop and the luxurious financing background of Babylon has been quite good. Also, the recent new OP_CAT protocol launches in the Bitcoin ecosystem have been very active.

In any case, compared to the dullness or even extinguishment of other ecosystems, the wealth creation effect and heat of the Bitcoin ecosystem are visible. After the extinction of inscriptions and runes, there is continued innovation and vitality, with a large amount of resources and funds entering, which is indeed worth looking forward to.

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