Stacks (STX) rises 10% due to Bitcoin network congestion

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As the Bitcoin and crypto markets plunge into the red, one altcoin stands out today, posting a double-digit price rise: Stacks (STX). Along with the Lightning Network, the project is considered the most promising layer 2 technology for Bitcoin today and currently benefits 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 picked up 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 of batteries

Congestion causes heated debate: While one side calls it a DDoS attack on Bitcoin, the opposite side calls the reason for high fees, Bitcoin ordinals and BRC 20 tokens a revolution. But no matter which side you take, one thing becomes clear. Layer 2 technologies are absolutely necessary and could become the big winners.

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Revolution or DDoS?

Market cap of BRC20-based #Bitcoin tokens reaches $1 billion.

Sh*tcoins are extremely congesting on the network. There are still 425,000 unprocessed transactions piled up in the meme pool.

Jake Simmons (@realJakeSimmons) May 8, 2023

However, if BTC price alone is to be the leading indicator, the current dilemma surrounding BRC20 tokens on the Bitcoin blockchain does not really do the network any good. Binance hasn’t really done the market a favor either with the multiple pullback stops.

But in the long run, higher fees are needed for the BTC network to replace the falling block reward. Stacks co-inventor Muneeb Ali therefore wrote on Twitter today that high fees are not an attack on Bitcoin, as they will be the norm when Bitcoin hits one billion. On the contrary, Ali says they are a wake-up call for developers to improve and grow Bitcoin L2s.

Bitcoin fees just hit a new all-time high. Up to 500 times compared to 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. It’s time to build.

Bitcoin expert Will Clemente also argued for L2 today:

If we are in a new regime of higher bitcoin transmission fees due to ordinals/brc-20, think there is a very compelling setup for the lightning network over the next few years.

STX increases by 10%

During the first days of May, the price of Stacks broke a downtrend that has been going on since March 20 (black line). Thanks to today’s 10% rise, STX price is now facing the 23.6% Fibonacci level at $0.82. At the price level, we can expect more resistance from the bears. Since April 19, STX has failed to regain the mark.

If successful, a rally towards the $0.92 region, where the 38.2% Fibonacci stands, seems possible. Then the path to the psychologically important $1 mark would be clear (50% Fibonacci). If the bulls break through this level as well, $1.07 (61.8% Fibonacci) and $1.18 (78.6% Fibonacci) would be the next targets.

STX Price, 4 Hour Chart l STXUSD at Tradingview.com

Featured image of xVerse Wallet, chart from TradingView.com

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