One cryptoanalyst reckons that off-chain Bitcoin activity is in a Bull Market right now
Zack Voell, a prominent crypto market researcher, has opined that while the pioneer cryptocurrency may be in a bear market in terms of price, there are signs that it is seeing bullish adoption in terms of off-chain activity.
Voell, who is an analyst at Bitcoin mining software company Braiins, said in an opinion piece that growth trends and supply data show that Bitcoin adoption is increasing across Layer 2 protocols, Bitcoin-backed tokens and more.
Highlighting “built-on-Bitcoin” layer 2 protocols, he notes that the growth of Lightning Network, Liquid Network and RSK have trended upward regardless of the price direction of Bitcoin over the past two years.
Similarly, tokenized Bitcoins — Bitcoin-backed tokens used as representations of Bitcoins on other blockchains — have shown “extraordinary growth.” An example of this is the Ethereum-based Wrapped Bitcoin (WBTC) launched by Bitgo.
The supply of WBTC has grown over the past two years regardless of the price decline of Bitcoin. Meanwhile, since its launch, several other projects on the Ethereum, Tron, Solana, and Avalanche blockchains have also launched other tokenized Bitcoin versions.
“The point of this data and analysis is simply to show that some people (actually an ever-increasing number) see the value in choosing to spend bitcoin somewhere else besides the Bitcoin blockchain – and even places outside of the native Bitcoin – the economy.” he wrote.
The former Compass Mining senior mining analyst added that these use cases are just as valid as HODLing Bitcoin or spending it on the original layer and could potentially be the future of Bitcoin adoption.
Bitcoin price continues to take a hit as crypto winter rages on
Voell’s comments come on the back of choppy trading in the Bitcoin market. Bitcoin is currently trading at around $18,700, per data from CoinGecko, down 59.5% in the year-to-date (YTD) time frame.
According to Reuters, Bitcoin’s recent price action, which has seen the leading cryptocurrency consolidate in the $17,000 to $20,000 range since July, could spell trouble for investors and exchanges. This is because the price trend indicates a massive drop in the volatility of Bitcoin, thus making it “boring” for the investors who may soon seek out its rivals like Ether.
Meanwhile, Bloomberg recently reported that Bitcoin has already seen alarmingly low activity on the chain and has seen massive withdrawals from centralized exchanges as investors have “gone dormant” amid the prolonged crypto winter.
