Bitcoin: Why Ordinals and Inscriptions attracted new addresses

• Bitcoin saw a surge in activity brought on by Inscriptions’ and Ordinals’ popularity.
• Miner revenue could see a boost due to increased activity; however, rising difficulty posed a challenge.

Bitcoin [BTC] has been experiencing significant volatility over the past few months, with its price fluctuating between $25,000 and $30,000. This volatility has understandably made many risk-averse investors cautious.

Amidst this uncertainty, there has been a notable increase in activity on the Bitcoin network, raising questions about the potential implications for the king coin.

Have Ordinals played a significant role?

The spike in network activity could be attributed, in part, to the growing popularity of Inscriptions and Ordinals. These developments have facilitated the integration of NFTs on the Bitcoin network.

While the initial hype around Bitcoin NFTs may have subsided, recent indications suggested a renewed interest in these digital assets. The resurgence of interest in NFTs likely contributed to the increased network activity, as users explored the potential of NFTs on the Bitcoin blockchain.

Source: Dune Analytics

Impact on miners

The heightened network activity is expected to benefit miner revenue, which experienced a decline over the past month. Waning miner revenue usually creates selling pressure on Bitcoin.

However, the increased network activity and transaction fees might offset this trend by providing miners with improved revenue streams.

Source: Blockchain.com

Regardless, the rising difficulty of Bitcoin mining could pose a threat to the miners. When the mining difficulty increases, miners face several negative impacts. They may receive reduced rewards due to lower mining success rates, leading to decreased profitability.

Additionally, higher difficulty requires more computational power and energy consumption, resulting in increased operational costs. The rising difficulty also attracts more miners, intensifying competition and reducing individual chances of earning rewards.

Source: Blockchain.com

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As of press time, BTC was trading at $27,088, with its price and trading volume having displayed significant volatility over the past month. Despite the market fluctuations, the Open Interest for Bitcoin indicated that traders remained willing to make bets on BTC’s future.

The sustained level of Open Interest suggested that traders were not deterred by the high volatility but viewed it as an opportunity for potential gains.

Source: Santiment