Investment Surge in Bitcoin L2 Networks
Recent analyses by Galaxy Digital’s research division project substantial growth for Bitcoin layer-2 (L2) networks, with an estimated $47 billion in Bitcoin liquidity expected by 2030.This forecast underscores the immense potential for expansion within the Bitcoin L2 landscape. In an exhaustive report, Galaxy Research highlights the rapid development of Bitcoin L2 infrastructures.
The number of active projects has soared, increasing an impressive sevenfold, while venture capital investment in this area has amassed a total of $447 million to date.
Looking ahead, Galaxy anticipates that these networks could capture around $47 billion in Bitcoin liquidity by 2030.
Venture Capital Dynamics
Breaking down the venture capital influx, the report shows that $447 million has been invested in Bitcoin L2 projects, with a remarkable 39% of this investment occurring within the first three quarters of 2024.Specifically, from January to September 2024, Bitcoin L2s collectively raised $174 million, with $105 million funneled into sidechains and $63 million directed toward rollups. One of the standout findings from this research is the significant shift in the investment scene during the second quarter of 2024.
During this period, Bitcoin L2 projects represented 44% of all venture capital directed toward layer-2 solutions across the entire cryptocurrency ecosystem.
Moreover, funding for these projects surged by a staggering 159% compared to the previous quarter.
Future Outlook for Bitcoin L2 Ecosystem
The report further points out that traditional crypto venture capitalists, particularly those with a focus beyond Bitcoin, had largely overlooked the Bitcoin ecosystem before 2024.Historically, these firms viewed Bitcoin predominantly as “digital gold.” However, the emergence of Bitcoin Ordinals and BRC-20 tokens in 2023 has opened fresh channels for investment, inviting a shift in perspective. As Galaxy looks to the future, they predict that the maturation of the Bitcoin L2 ecosystem will draw even more capital from crypto venture investors.
They foresee that by 2030, the demand for yield opportunities among Bitcoin holders could lead to a significant influx of liquidity into these networks.
Galaxy explains that if Bitcoin reaches a valuation of $100,000 by then, the addressable market for Bitcoin L2s may expand to $47 billion, assuming 2.3% of the total Bitcoin supply is locked into L2 solutions. Despite the rapid growth of this sector, the research suggests that market dominance will likely be concentrated among a few key players—expected to be between three to five—out of the current pool of 75 active participants in the Bitcoin L2 development space. “`html
Source: Cointelegraph.com
“`
