Bitcoin Ordinals touched a new record high volumes this week and contributed as much as 80% to the total fees paid on the Bitcoin network on Thursday, November 16, 2023.
Yet, there was not a subsequent increase in the inscription fees possibly owing to less number of Bitcoin transactions.
Data from Dune Analytics also indicates a correlation with the news of Bitcoin ETFs.
Ordinals volume has recovered due to a stunning movement in Bitcoin's price which itself rides on the sentiments of Bitcoin ETF.
The spike in Ordinals volume appeared exactly when Bitcoin started its journey from $30,600 to $34,500 within a day between October 23-24, 2023. The move resulted in an increase in the number of Bitcoin Ordinals inscriptions.
From the above graph it can be clearly observed that there was a month-long pause between September 23, 2023 to October 23, 2023. There were negligible transactions as compared to preceding months.
A reason for this pause was the inactiveness of the SEC in granting approval to Bitcoin ETFs. This inactiveness caused bears to take over the market.
We can see that Bitcoin's price was either decreasing or flat for the above mentioned period.
Bitcoin Ordinals react strongly to the news of Bitcoin's price which itself is sensitive to macroeconomic demand.
High demand would mean a higher Bitcoin price and subsequently would raise the value of Bitcoin ordinals. A high demand would occur in a situation when investing in Bitcoin would be a lot easier which is the aim of Bitcoin ETFs.
Therefore, Bitcoin ETFs would drive the demand for Bitcoin which in turn would help raise the value of Bitcoin Ordinals.
Galaxy Research found out that as much as 80% fees paid in the entire Bitcoin Network was related to Bitcoin Ordinals. The total cumulative fees till date, paid for inscriptions were $96.7 million.
The most popular type of inscriptions were text-based ones. Ordinals also support image, video, code, apps, and a few other types of inscriptions. Text-based ordinals constitute 95.5% of the total number of Bitcoin Ordinals in existence.
Note: The process of attaching data on a Satoshi (1/100Mth of a Bitcoin) is called an inscription. This process results in the creation of a Bitcoin Ordinal.
Bitcoin ordinals are no different than Ethereum's NFTs. This causes us to wonder if Ordinals are just a fad or is there something real to their existence.
Post the crypto winter, there has been a hunt for those crypto projects which offer some value. All other projects lost users. The lack of utility and the high gas prices in Ethereum NFTs killed their market.
However, Bitcoin Ordinals seem to perform better where NFTs could not survive. This is possibly because due to a few simple reasons.
Bitcoin Ordinals are pieces of information inscribed in the smallest unit of Bitcoin, a Satoshi. Each Satoshi can be inscribed with various types of information such as texts, videos, images, software, code and others.
Bitcoin Ordinals seem harmless but some of them are definitely harmful. Malwares and spywares could be inscribed which would attempt to steal private keys.
The best way to invest is by gaining as much knowledge as possible before investing any money.
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