STX Price Stacks Up Well, Outperforming Bitcoin

The native token of Bitcoin layer-2 protocol Stacks (STX) has seen its value soar this year with its performance continuing to carry over into March, edging it to a top spot this week.

Following the buzz generated by the Ordinals on Bitcoin, which opened the floodgates for non-fungible token use cases on the world’s oldest blockchain, STX is riding shotgun.

Stacks and Ordinals are different and separate protocols, both utilizing the Bitcoin blockchain. Stacks allows for the creation of complex dApps, while Ordinals provide a simple way to inscribe data in Bitcoin blocks. 

STX is changing hands for $0.83, up 2.7% in the past 7 days, despite a lackluster performance in the broader digital asset market (BTC itself is down -6.5%) over the same period. In year-to-date terms, STX has climbed about 300% — most of that coming in late February — alongside a $900 million injection in its total market cap over the same period.

Perhaps most notably, it’s up about 200% against BTC in the past month.

As the bitcoin halving steadily approaches, investors like Hal Press, founder of crypto investment firm North Rock Digital, believe there exists a “relatively untapped” market opportunity for the project.

“The team is very strong, ecosystem is growing and tokenomics are favorable,” Press said in a tweet, last week. “Relatively few active funds own the token but many more will as we approach the halving.”

STX has the potential to play a similar role for the halving as the Ethereum liquid staking solution Lido DAO did for the Merge, Press said in an accompanying blog post. Lido’s stETH, and other liquid staking derivatives, let users engage in the operation of Ethereum’s proof-of-stake chain and earn daily rewards in return.

During the lead-up to the Ethereum Merge in July and August of last year, LDO saw a 600% boost in its token price over a six-week period.

Andrew Kang, founder of crypto investment firm Mechanism Capital, agrees with Press’ assessment. Stacks appeals to long-term investors, including bitcoin holders and venture funds, from an allocation perspective, he said.

Since lightning does not have its own token, Stacks has emerged as the primary focus for capital flows that are tied to the halving and the BTC economy, Kang said in a tweet responding to Press’ statements.

While Ordinals and STX have no connection to each other, the bitcoin community has developed a growing interest in NFTs and DeFi, Blockworks Research analyst Sam Martin said.

NFTs (Ordinals) on the Bitcoin blockchain may also bring more financial use cases to the network and drive more demand for block space, Ho Chan Chung, head of marketing at on-chain analysis platform CryptoQuant told Blockworks.

“As a result, this will increase miners’ fees and bolster their long-term sustainable growth.” That could also drive other projects seeking to piggyback on whatever the current narrative might be surrounding bitcoin’s ecosystem.

On the other hand, inscribing non-fungible characteristics to satoshis could negatively affect privacy and fungibility, Chung said.

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