Decentral Block Post

Stacks is one of the first blockchains to enable a way for minting Bitcoin (BTC) Ordinals, which puts it in an excellent position to benefit from the hype. However, Ordinals have invoked an issue from the past where Bitcoin maximalist ideologies will be tested if the NFTs lead to network congestion.

On top of that, Stacks has yet to deliver all the functionalities required to support an NFT trading ecosystem and it faces competition from projects in other blockchain ecosystems. The fundamental and technical analysis of the project suggests that the price surge might have reached overbought conditions and may correct in the near term.

Ordinals development is unpredictable for now

The recent focus on inscribing NFTs on the Bitcoin network peaked in the last month after Casey Rodarmor inscribed an Ordinal on Jan. 29. While the trend took off to an overwhelming start, the minting is limited to technical users with a Bitcoin node and trading primarily takes place through OTC channels.

In comparison to Ethereum NFT marketplaces, the infrastructure for Bitcoin NFT trading remains significantly underdeveloped in regards to complex activities like decentralized trading. Many investors have expressed their belief that there needs to be a way to spin up marketplaces and NFT minting platforms for Ordinals.

The Bitcoin developer community has previously discouraged using the network for anything other than payments because it clogs the space and increases transaction fees. In the bull run of 2020 and 2021, many Ethereum (ETH) users paid hundreds of dollars in fees per transaction as user activity on it exploded. On the other hand, Bitcoin’s fees stayed at optimum levels throughout the bull run, but the usage and earnings of the protocol lagged behind Ethereum.

The month of February was filled with investors’ hope that an earlier-than-expected Federal Reserve policy pivot would occur, but this sentiment faded as the inflation and employment data came in hotter than expected. While the start of the month was bullish for the crypto market, Bitcoin (BTC) retraced 60% of the move from February’s low at around $21,500 to the peak of $25,250. 

Nevertheless, some narrative-driven rallies still caused significant price growth in some altcoins. The leading narratives were Bitcoin NFTs, liquidity staking derivatives (LSDs) on Ethereum and Artificial Intelligence (AI) projects.

Let’s review the top performing coins of the month.

Stacks (STX)

Stacks gained much attention as the hype over Ordinals kicked off at the start of the month. Gamma, a Stacks-based project, enabled the creation of Bitcoin Ordinals. However, full functionality in trading and public minting of Ordinals on Stacks is still in development.

Meanwhile, Stacks faces competition from other blockchains like Ethereum, where developers are working toward enabling Bitcoin NFT trading on Ethereum. Yuga Labs, the leading NFT firm, announced a 300-piece generative collection on Bitcoin on Feb. 27. The auction (or minting) will likely be held on Ethereum due to the lack of infrastructure on Bitcoin. Thus, as Stacks delays its development of making Ordinals accessible, more liquid chains are taking advantage of other solutions.

The month of February was filled with investors’ hope that an earlier-than-expected Federal Reserve policy pivot would occur, but this sentiment faded as the inflation and employment data came in hotter than expected. While the start of the month was bullish for the crypto market, Bitcoin (BTC) retraced 60% of the move from February’s low at around $21,500 to the peak of $25,250. 

Nevertheless, some narrative-driven rallies still caused significant price growth in some altcoins. The leading narratives were Bitcoin NFTs, liquidity staking derivatives (LSDs) on Ethereum and Artificial Intelligence (AI) projects.

Let’s review the top performing coins of the month.

Stacks (STX)

Stacks gained much attention as the hype over Ordinals kicked off at the start of the month. Gamma, a Stacks-based project, enabled the creation of Bitcoin Ordinals. However, full functionality in trading and public minting of Ordinals on Stacks is still in development.

Meanwhile, Stacks faces competition from other blockchains like Ethereum, where developers are working toward enabling Bitcoin NFT trading on Ethereum. Yuga Labs, the leading NFT firm, announced a 300-piece generative collection on Bitcoin on Feb. 27. The auction (or minting) will likely be held on Ethereum due to the lack of infrastructure on Bitcoin. Thus, as Stacks delays its development of making Ordinals accessible, more liquid chains are taking advantage of other solutions.

The recent weakness in the crypto market has not invalidated the six-week-long ascending trend, even after a failed test of the channel's upper band on Feb. 21. The total crypto market capitalization remains above the psychological $1 trillion mark and, more importantly, cautiously optimistic after a new round of negative remarks from regulators.

As displayed above, the ascending channel initiated in mid-January has room for an additional 3.5% correction down to $1.025 trillion market capitalization while still sustaining the bullish formation.

That is excellent news considering the FUD — fear, uncertainty and doubt — brought down by regulators regarding the cryptocurrency industry.

Recent examples of bad news are, a United States District Court judge ruling that emojis such as the rocket ship, stock chart and money bags infer "a financial return on investment," according to a recent court filing. On Feb. 22, a federal court judge ruling on a case against Dapper Labs denied a motion to dismiss the complaint alleging that its NBA Top Shot Moments violated security laws by using such emojis to denote profit.

Outside of the U.S., on Feb. 23, the International Monetary Fund (IMF) issued guidance on how countries should treat crypto assets, strongly advising against giving Bitcoin a legal tender status. The paper stated, "while the supposed potential benefits from crypto assets have yet to materialize, significant risks have emerged."