Stacks (STX) Surges 10% Due To Bitcoin Network Congestion
While the Bitcoin and crypto markets are deep in the red, one altcoin stands out today, posting a double-digit price increase: Stacks (STX). Along with the Lightning Network, the project is considered the most promising layer-2 technology for Bitcoin at the moment and is currently benefiting from the network congestion dilemma.
There are currently over 425,000 unconfirmed transactions in the meme pool. Before being added to the Bitcoin blockchain, transactions are sent to the network’s meme pool, where they wait to be selected by a Bitcoin miner and inserted into the next Bitcoin block. At medium priority, a transaction currently costs an average of $19.04.
The Case For Stacks
The congestion is causing a heated debate: While one side calls it a DDoS attack on Bitcoin, the opposing side is calling the reason for the high fees, Bitcoin ordinals and BRC 20 tokens, a revolution. But no matter which side one takes, one thing becomes obvious. Layer-2 technologies are absolutely necessary and could emerge as a big winner.
Revolution or DDoS?
🚀Market cap of BRC20 based #Bitcoin tokens reaches $1 billion.
⌛️Sh*tcoins are extremely congesting the network. There are still 425,000 unprocessed transactions piled up in the meme pool.
— Jake Simmons (@realJakeSimmons) May 8, 2023
However, if the BTC price alone is to be the leading indicator, the current dilemma surrounding BRC20 tokens on the Bitcoin blockchain is not really doing the network any good. Binance hasn’t really done the market any favors either with the multiple withdrawal halts.
But in the long run, higher fees are needed for the BTC network to replace the falling block reward. Co-inventor of Stacks, Muneeb Ali, therefore wrote today on Twitter that high fees are not an attack on Bitcoin, as they will be the norm when Bitcoin grows to a billion people. Rather, Ali says they are a wake-up call to developers to improve and grow Bitcoin L2s.
Bitcoin fees just hit a new record. Up 500x from just a few months ago. Officially marks the start of the arms race to build the best Bitcoin L2s. Lightning, Stacks, and Rootstock have a head start. Time to build.
Bitcoin expert Will Clemente also made the case for L2 today:
If we are in a new regime of higher Bitcoin tx fees due to ordinals/brc-20s, think there’s a very compelling setup for the lightning network over the next few years.
STX Rises 10%
During the first days of May, the Stacks price has broken a downtrend that has lasted since March 20 (black line). Thanks to today’s 10% rise, the STX price now faces the 23.6% Fibonacci level at $0.82. At the price level, stronger resistance from the bears can be expected. Since April 19, STX has not managed to regain the mark.
If this succeeds, a rally to the region of $0.92, where the 38.2% Fibonacci is located, seems possible. Afterwards, the way to the psychologically important mark of $1 would be clear (50% Fibonacci). If the bulls also break through this level, $1.07 (61.8% Fibonacci) and $1.18 (78.6% Fibonacci) would be the next targets.
Featured image from xVerse wallet, chart from TradingView.com
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