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While the Bitcoin and crypto markets are deep in the red, one altcoin stands out today showing double-digit price gains: Stacks (STX). Along with the Lightning network, this project is currently considered the most promising layer 2 technology for Bitcoin, and is currently capitalizing on the network congestion dilemma.
There are currently over 425,000 unconfirmed transactions in the meme pool. Before being added to the Bitcoin chain, transactions are sent to the network’s meme pool, where they wait until Bitcoin miners pick them up and insert them into the next Bitcoin block. At medium priority, a transaction currently costs an average of $19.04.
The case of stacks
The congestion is hotly debated: while one side calls it a DDoS attack on Bitcoin, the other side calls the cause of high fees, Bitcoin ordinals and BRC 20 tokens a revolution. But whichever side you take, one thing becomes clear. Tier 2 technologies are absolutely essential and can be 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 leading indicator should only be the price of BTC, the current dilemma surrounding BRC20 tokens on the Bitcoin blockchain does not really benefit the network. Binance has not really provided any service to the market with multiple withdrawal stops.
But in the long term, higher fees are needed for the BTC network to replace the falling block reward. Therefore, Stacks co-author Munib Ali tweeted today that high fees are not an attack on Bitcoin as they will become the norm when Bitcoin grows to a billion people. Rather, Ali says they are a wake-up call for developers to improve and expand Bitcoin L2.
Bitcoin fees just set a new record. 500 times more than just a few months ago. Officially marks the start of an arms race to create the best bitcoin L2. Lightning, Stacks and Rootstock have a head start. Time to build.
Bitcoin expert Will Clemente also spoke out in favor of L2 today:
If we are in a new mode of higher bitcoin transaction fees due to serial numbers/brc-20, consider that there will be a very compelling setup for the Lightning network in the next few years.
STX up 10%
In the first days of May, the price of Stacks broke the downtrend that had been going on since March 20 (black line). With today’s 10% gain, the STX price is now in front of the 23.6% Fibonacci level at $0.82. At the price level, we can expect stronger resistance from the bears. Since April 19, STX has failed to regain the mark.
If this succeeds, then a rally to the $0.92 area, where the Fibonacci 38.2% lies, seems possible. After that, the path to the psychologically important $1 mark would be open (50% Fibonacci). If the bulls also break this level, the next targets would be $1.07 (61.8% Fibonacci) and $1.18 (78.6% Fibonacci).
STX price, 4-hour l STXUSD chart on Tradingview.com
