A senior industry executive observes how the developing Bitcoin ecosystem has led to the dispersion of earlier prominent promotional messages.
Charlie Hu from Bitlayer identifies Ordinals and re-staking along with layer-2 solutions as the narratives which received excessive hype during previous times. The narrative trends that picked up significant interest among Bitcoin enthusiasts have diminished in importance in the community.
The market data from CryptoSlam shows strong indications that Bitcoin NFT activity has dramatically decreased. Trading activities for Bitcoin NFTs amounted to $1.4 billion throughout the first three months of 2024. The Bitcoin NFT trading volume decreased to approximately $280 million between January and March 2025, while during the corresponding period of 202, this total was $1.4 billion, showing a drastic 80% drop.
According to Hu Bitcoin NFT returns which exceeded 1,000x have probably come to an end as he advises investors to expect reduced price surges like before.
Bitcoin Layer-2 Networks Face a Decline in Interest
The market sentiment for Bitcoin layer-2 solutions has dimmed because venture capital stakeholders show reduced interest in these projects. The breakdown of interest in Bitcoin NFTs coincided with substantial decreases in demand for both Bitcoin layer-2 networks and Bitcoin assets used for re-staking.
In early 2024 the layer-2 network market reached its maximum popularity, with more than 80 different protocols seeking financial backing. The projects presented their solutions for investors and media outlets together with crypto communities. Most experts agree that the excessive initial fanfare surrounding this phenomenon has disappeared at this point.
Various industry figures agree that the enthusiasm for layer-2 solutions has significantly decreased. Cofounder Muneeb Ali from Stacks spoke during a February 20 conference by declaring that Bitcoin layer-2 networks have surpassed their initial excitement phase. Many Bitcoin expansion projects will encounter difficulties when the wave of initial support weakens according to his analysis.
Bitcoin re-staking alongside other layer-2 solutions lost its previous level of popularity in the market. The sector still faces difficulties because available reports show that activity in layer-2 projects now exists in only two or three initiatives after early 2024 marked the peak of interest.
Bitcoin DeFi Yet to Reach Its Full Potential
Several industry leaders consider Bitcoin layer-2 solutions as developments which will unravel over time rather than brief fad-like trends. DOMINIK HARZ who co-developed hybrid layer-2 Build on Bitcoin (BOB) emphasizes that Bitcoin’s development success should be judged apart from short-lived market fluctuations.
The development phase of Bitcoin DeFi exists in its nascent stage according to Harz. The decentralized finance sector of Bitcoin holds a tiny 0.3% share of market capitalization, while Ethereum demonstrates 30% utilization in its decentralized finance ecosystem. According to his analysis, the variance between Bitcoin DeFi and Ethereum DeFi will decrease substantially when Bitcoin DeFi expands and achieves widespread utilization. Bitcoin DeFi needs layer-2 networks for market establishment, according to his perspective.
Max Sanchez, chief technology officer of layer-2 protocol Hemi Labs, holds a similar perspective. According to his perspective, layer-2 networks based on Bitcoin do not lose popularity but enter a development phase that prioritizes fundamental advancements. According to him, numerous initial Bitcoin layer-2 solutions adopted Ethereum-based technology without appropriately adapting it to enhance Bitcoin-specific capabilities.
Sanchez criticizes the idea of developing layer-2 solutions independently because his hybrid model aims to connect Bitcoin to Ethereum. Sanchez declared that refusing to connect Bitcoin layer-2 protocols to Ethereum-based systems represents a misguided method that slows down Bitcoin’s growth and limits innovation within its second-layer system.
