Bitcoin Hits a 2-Month High as BTC Lightning Network Scales the Heights

After surging past $31,000, a scenario was last seen in March, renewed momentum seems to be ticking in the Bitcoin (BTC) market. 

The leading cryptocurrency was up by 3.24% in the last 24 hours to hit $31,629 during intraday trading, according to CoinMarketCap.

After printing nine consecutive weekly red candles, momentum is building up in the Bitcoin market thanks to a surge in the BTC Lightning network and China’s slackened Covid-19 restrictions.

On-chain analyst Will Clemente pointed out:

“Bitcoin lightning network capacity continues pushing to new all-time highs despite the recent price decline. Although still in its infancy, Bitcoin’s L2 continues to show consistent growth, allowing BTC to scale as a medium of exchange.”


Source: Glassnode

On the other hand, China eased Covid curbs as the present outbreak fades away, causing stocks to rise in Europe and Asia. This is proving to be a friendly gesture to the BTC market.

The Bitcoin Lightning Network is a second layer incorporated into the BTC blockchain to undertake off-chain transactions. As a result, micropayment channels are utilized to scale the blockchain’s capacity to carry out transactions more efficiently. 

Therefore, transactions on lightning networks are believed to be more readily confirmed, cheaper, and faster than that processed on-chain or Bitcoin mainnet.

Earlier this year, leading investment bank Morgan Stanley believed that the Bitcoin Lightning Network would be more practical for small payments than debit cards based on the near-zero fees attracted.

Meanwhile, for Bitcoin’s upward momentum to be sustained, the leading cryptocurrency ought to breach the $32,000 level.

Crypto analyst Rekt Capital pointed out:

“BTC needs to break orange ~$32K resistance to enable a rally to ~$35K.”


Source: TradingView

Accumulation is also ticking in the Bitcoin market, and this is bullish. 

Image source: Shutterstock


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Bitcoin Lightning Network growth capacity plateaus at 3,400 BTC

Following an exponential climb in capacity over 2022, the Bitcoin (BTC) Lightning Network made a lackluster start to the new year. According to a report by Arcane Research, growth in the Lightning Network capacity, or the number of BTC locked up in channels, has stuttered. 

The Lightning Network surged from 1,000 to 3,000 BTC in just 8 months in 2021, striking the 3,000 BTC mark in mid-October.

While the network continues to strike all-time highs, growth grinds down. The total BTC locked in the network is peaking just shy of the 3,500 BTC mark, sparking debate and discussion on social media.

As a quick refresher, the Lightning Network is one answer to the scalability issue that plagued the Bitcoin protocol. Lightning allows instant and super low-cost off-chain transactions; however, it requires Bitcoin to be locked up in payment channels distributed across lightning nodes. 

Lightning Network activity soared in 2021, primarily thanks to El Salvador onboarding a whole country and Twitter integrating Bitcoin Lightning tipping. In an October report, Arcane Research predicted that there would be 700 million Lightning Network users by 2030.

So why has growth slowed in 2022? Bitcoin Lightning Network+ Twitter account stated that platforms such as Umbrel (an easy to set up node and lightning node service), sent initial growth to the moon. Naturally, due to S curve growth, it would have to plateau.

Danny Scott, CEO and Co-Founder at CoinCorner, the UK’s leading lightning exchange, told Cointelegraph:

“I don’t think we’re seeing growth of the Lightning Network plateauing at all. We saw a major growth spike due to last year’s news and growth would now appear to be more organic.”

S-curve adoption plateaus to one side, he notes that “December is a holiday period for many around the world and often when the Bitcoin industry slows down.”

Rene Pickhardt, co-author of the “Mastering the Lightning Network” book, explained that the slowdown in growth could actually be a good thing for Bitcoin. He Tweeted:

“Given the fact that node count can only grow with channels and that the channel growth is limited by storage constraints in Bitcoin, we might only have a very short period of time with exponential growth. After that, we will be at best linear.”

Looking forward, lightning may strike twice for the second layer Bitcoin solution. A wealth of updates and news may spark further growth, such as the American mobile payment service Cash App which rolled out Lightning Network integration to its circa 30 million users.

Indeed, better UX and easy lightning integration for existing apps and exchanges might be the shock that the network needs. Danny sheds light on the situation:

“Once we introduced “Lightning Addresses” (eg. to make it easier for our customers to receive Lightning payments we have seen an incredible uptick in usage.”

The Arcane Research paper agrees with CoinCorner that the Lightning Network could be entering a new growth phase; the best could be yet to come.