The Bitcoin blockchain has recently experienced a surge in fees, reaching two-year highs due to the increasing demand for block space driven by BRC-20 tokens and the quickly growing popularity of the Ordinals Protocol. As of Monday, the average transaction fee on the Bitcoin network spiked to just under $20, a significant increase from last week’s average of $1.20. The last time such levels were seen was in May 2021, when Bitcoin prices hit a record peak of $60,000.
In the past week, the number of non-fungible tokens (NFTs) linked to the Bitcoin blockchain exceeded 3 million, mainly fueled by a one-day activity spike in text-based assets, as per Dune Analytics’ data. These tokens, called inscriptions, are powered by the Ordinals Protocol which allows users to embed data into the Bitcoin blockchain through small BTC-based transactions, containing references to digital art.
Simultaneously, the BRC-20 token standard has enabled users to issue transferable tokens directly through the network, giving rise to a variety of digital artwork and meme tokens based on Bitcoin. As of Monday, over 11,000 tokens issued on Bitcoin carried a cumulative market capitalization of $1.6 billion, with OrdSpace data showing they are available on the open market.
Ordi (ORDI) tokens from the Ordinals marketplace are the most valued BRC-20 tokens, boasting a market capitalization of $220 million and more than 7,300 unique token holders. As the first BRC-20 token deployed on Bitcoin, Ordi’s value proposition among holders has likely been bolstered. Pepe tokens, issued on Bitcoin unlike those on Ethereum, come in as the second-largest BRC-20 issuance with a smaller $17 million market capitalization.
Despite steep price slides, BRC-20 tokens continue to generate millions of dollars in trading volumes on the Bitcoin blockchain. Some have argued that these high levels of transactional activity indicate network adoption, which in turn supports Bitcoin’s overall fundamental narrative.
Tom Rodgers, Head of Research at ETC Group, pointed out the contrast in transaction size between the 2019 peak and now, with the largest cohort of Bitcoin transactions consisting of those under $1, hinting at a considerable increase in Bitcoin velocity.
However, this rapid adoption has also resulted in network congestion, leading to issues at cryptocurrency exchanges like Binance, which had to halt Bitcoin withdrawals twice over the weekend. Consequently, on-chain data reveals nearly 415,000 unconfirmed Bitcoin transactions as of Monday, surpassing numbers from the bull runs in 2018 and 2021.