Ordinal NFTs Push Bitcoin Network Activity to Near 2-year High – What This Means for the BTC Price?

cryptonews.com:

The 14-Day Exponential Moving Average (EMA) of the number of transactions taking place on the Bitcoin network hit its highest level since April 2021 earlier this month, according to data from crypto analytics firm Glassnode. The 14-Day EMA of transactions recently surpassed 300,000, with analysts and cryptocurrency market commentators citing the recently deployed Bitcoin NFT protocol called Ordinals.

According to crypto derivatives firm BitMEX, as of the 7th of February, over 13,000 Ordinal NFTs had been minted directly onto the Bitcoin blockchain, taking up 526MB of block space and associated with a spend of 6.77 BTC (worth around $150,000 at current prices).

The deployment of Ordinal NFTs directly onto the Bitcoin blockchain has been controversial, with some claiming its goes against pseudonymous Bitcoin creator Satoshi Nakamoto’s original vision of the Bitcoin blockchain only being used for financial purposes. Whether you agree with the existence of Bitcoin-based NFTs or not, they are making a mark on the network.

So can Ordinals result in a wider uptick in network activity that benefits the Bitcoin price?

Some analysts and commentators have expressed concerns that the existence of the Ordinal NFTs, which have resulted in numerous Bitcoin blocks hitting the 4MB limit, might put upwards pressure on network fees. However, according to Glassnode data, there has been no notable uptick in network fees as of yet.

Some have argued that if the Ordinal NFTs were to lead to a rise in the Bitcoin network fees, this could be good for miners, thus representing a long-term positive for the Bitcoin network’s security. However, given that fees have yet to pick up, Bitcoin miner revenue relative to its recent history remains supressed.