In its latest report, BitMEX Research examined how BRC-20 Tokens and Ordinal images are affecting Bitcoin node verification.
The study looked at Ordinal-related data on Bitcoin, including the transaction count and data size, to determine their impact on node operators.
BRC-20 Tokens Strain Bitcoin Nodes More Than Images
The September 8 report revealed that BRC-20 tokens create more problems for some Bitcoin node runners than Ordinal images. Notably, the former make up 92.5 million transactions while the latter account for only 2.7 million, yet both use about 30GB of storage. However, BRC-20 transactions put greater strain on nodes, while larger image-based Ordinals have little to no effect on performance.
BitMEX explained that large Ordinal images are easier for nodes to handle than regular transactions since they are stored in a non-executed part of the Taproot witness, and do not require signature checks. This makes them less demanding to verify and sometimes even helpful for scaling because they take up blockspace without adding to the UTXO set.
On the other hand, BRC-20 transactions function more like regular Bitcoin activity. Despite being smaller in size, they have expanded the UTXO set, growing from 84 million to 169 million between December 2022 and September 2025. This increase is creating challenges for node runners, especially those operating pruned ones. Data shows that such transactions have paid higher fees for blockspace, contributing more than 5,000 BTC since the protocol was introduced.
Tests Show Larger Ordinals May Speed Verification
BitMEX ran several tests for nearly three years to measure how quickly nodes could download and verify blocks with different levels of Ordinal-related data. The results suggest that large amounts of “arbitrary data” can actually speed up blockchain verification, with around 11% of the differences in speeds being due to larger inscriptions.
However, the researchers warned that the results do not mean Ordinal images are good for Bitcoin. This is because data-heavy inscriptions use a lot of blockspace, which could push out financial transactions that are central to the network’s purpose.
Elsewhere, a separate study by Glassnode found that Ordinals and BRC-20 tokens are not displacing regular Bitcoin transactions. The firm’s lead analyst explained that they are instead bringing more value, fees, and data into each block.
Additionally, BitMex emphasized that the findings are not conclusive because factors like internet speed and hardware differences can influence performance. They also encouraged further testing, noting that any small efficiency gains for nodes must be weighed against the broader costs to the Bitcoin network.
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One week before the halving, the Bitcoin network is faced with another wave of hot demand, with some coming from a now familiar source: Ordinals traders.
As of Thursday, data from mempool.space shows that Bitcoin users are paying over 90 sats/vByte of block space, placing the average cost of a transaction at $8.50 apiece.
Ordinals Make Their Comeback
The surge in fees has corresponded with an uptick in daily Ordinals inscriptions, which tallied over 162,000 on Thursday compared to a monthly average of 90,280. Meanwhile, the “daily inscription fee spend” reached $1.24 million, its highest level in the past month.
The vast majority of network fees were contained to regular transactions, however. Some suspect that on-chain trading activity is ramping up in advance of the Bitcoin halving, which will cut Bitcoin’s supply inflation rate in half within roughly one week.
“Been monitoring Bitcoin fees for the past few weeks now, and they are starting to rise again meaningfully,” wrote CryptoSlate lead analyst James Van Stratten to Twitter on Thursday. “Bitcoin hasn’t flipped Ethereum fees in 2024; I think they might soon. Halving may be the catalyst.”
It’s not just the halving, either: on April 19, the “Runes” protocol will be activated – a new token standard on Bitcoin invented by Ordinals creator Casey Rodamor. Much like BRC-20 tokens before them, some expect that their trading activity at launch could drive fees to over $30 each.
“Runes launch at Bitcoin halving will begin memecoins on Bitcoin season,” tweeted TrustMachines CEO Muneeb Ali on Monday. “As L1 breaks with insane fees and activity, all roads lead to Bitcoin L2s.”
The Incoming Bitcoin Fee Wave
Tokens have been foreign to Bitcoin for the bulk of the network’s lifespan, though there’s reason to believe they’ll immediately gain traction when introduced.
For instance, Ordinals ushered in NFTs on Bitcoin less than 18 months ago, and have already turned the network into the most popular blockchain for NFT trading, surpassing Ethereum. On Thursday, Bitcoin’s 24-hour NFT trading volume tallied $28 million, versus Ethereum’s $9 million, according to CryptoSlam.
On the bright side, high fees from Ordinals drive up revenues for miners – the entities responsible for securing the Bitcoin network. The halving will naturally cut the bulk of miners’ rewards in half, requiring higher network fees to make up the difference for their bottom line.
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As the year draws to a close, we do an NFT market analysis, mapping its trajectory and comparing it with the predictions experts have laid out for 2024.
2023 was not the best year to be a non-fungible token (NFT) holder or trader. Following nearly two years of unprecedented growth, a liquidity plunge hit the NFT market in Q4 2022, persisting into mid-2023.
It caused the floor prices of at least 95% of NFT projects to crash near zero levels, as revealed by a dappGambl report from September.
To stress the gravity of the situation, the report indicated that nearly 80% of all NFT tokens remained unsold as there was virtually no demand to keep up with the supply.
Furthermore, per dappGambl, less than 1% of nearly 9,000 top NFT collections it surveyed had a value north of $6,000. About 41% were priced between $5 and $100, while 18% were worthless, with a floor price of 0 Ether (ETH).
Dead NFTs | Source: dappGambl report
NFT market analysis for 2023
Despite the decline in the broader crypto market, NFT trading volumes increased sharply in Q1 2023. The improved numbers came from zero-fee incentives, airdrops from the Blur NFT marketplace, and its royalty wars with OpenSea.
During that early part of the year, NFT token transactions reached $4.7 billion, with Ethereum dominating the market, registering $514 million in trades in one month alone.
The network also accounted for at least 50% of total NFT transactions in 2023, with average monthly transaction volumes of between 1 and 2 million per data from CryptoSlam.
Meanwhile, Solana (SOL) experienced a dip in its NFT market size as it struggled with the fallout from the FTX bankruptcy and a series of downtimes and glitches that affected it in 2022.
However, after attaining a high of 74,550 ETH in mid-February, trading volumes across NFT blockchains decreased gradually, with NFT coin holders reaching year-low levels by April, per data from NFTGo.
Q1 2023 also saw the resurgence of the NFT lending market. Players in the space disbursed more than $25 million in the first three months of the year, with platforms like ParaSpace becoming the most prominent, while NFTFi accrued the highest number of NFT lending users.
One of the main talking points of the 2023 NFT landscape was Bitcoin’s (BTC) unique take on non-fungible tokens. The so-called Bitcoin Ordinals offered a different spin from the more popular variants on networks like Ethereum and Solana. However, they came with limitations, including slower transaction speeds and a limited application range.
But despite these challenges, Bitcoin’s NFT ecosystem made significant strides, exemplified by Yuga Labs’ successful auction of its TwelveFold collection.
Launched in February 2023, Bitcoin Ordinals generated about $400 million in trading volumes by May, with total sales just north of 832,000.
Elsewhere, Gem.xyz’s rebrand to OpenSea Pro also made headlines. It was accompanied by introducing the Gemesis NFT line, which registered rapid trading growth and a steady holding time and value among users.
November stood out as a month of recovery following a period of lean profitability. According to CoinDCX, more than 40% of traders turned a profit that month, a trend reminiscent of the market stability observed in the second quarter of 2022.
Market watchers also noted an increase in unique active wallets and trading volumes. Some sources pegged the trading volume escalation at 125%, which observers considered a manifestation of collective investor confidence and echoed the positive outlook prevalent in the broader crypto market in November.
Concurrently, the holding period for NFTs saw a steep decline, from an average of 100 days in October to just 18 days in November. Analysts saw this as indicating a shift in strategy towards short-term holding, which may have reflected readiness among NFT traders to exploit shorter market cycles.
However, the positive outlook did not stop average NFT prices from dipping by about 42% in Q4 2023 to settle around the $150 mark.
NFT market research
NFT market research by TechNavio revealed that the collectible token sector is poised to grow off the back of rising global demand and the digital transformation of various industries.
According to the firm, increasing internet and mobile usage has prompted companies to extend their digital asset offerings and investments.
On a regional scale, the survey projected the Asia-Pacific region to contribute as much as 39% of the global NFT market cap. This is underpinned by increased demand for non-fungible tokens in countries like Singapore, South Korea, the Philippines, Japan, and China.
Furthermore, the research revealed that the NFT market size is bolstered by expansion into art and fashion sales in retail outlets, exemplified by partnerships like CJ OliveNetworks and Galaxia Metaverse.
Another market survey carried out by NFT data provider NFTGo determined that the mean assets per investor for individual NFT projects were $3,893, while the median value stood at $1,459.
The marked discrepancy between the two figures, with the average exceeding the median by 63%, suggested that assets held by wealthier investors significantly inflated the mean per capita assets, further widening the wealth gap among participants in different projects.
A closer look at NFTGo’s data revealed that although the year was marked by selling, significant purchases were also observed, especially for top-tier NFTs like CryptoPunks, which traded at an average price of 67.05 ETH.
NFT market value in 2023
Expert predictions had the U.S. NFT market, valued at about $22 billion at once, growing at a compound annual growth rate (CAGR) of more than 34% between 2023 and 2030.
U.S. NFT market projection | Source: Grand View Research
However, as previously stated, the NFT marketplace growth in 2023 saw a significant decline, with transaction volumes slumping to $4.7 billion, starkly contrasting the $12.6 billion volume recorded in the same period in 2022.
With the public losing interest in NFTs, leading marketplaces such as OpenSea witnessed significant drops in deal values between December 2021 and December 2022, and this trend was mirrored across several other platforms as well.
OpenSea’s monthly active user base stood at around 250,000, with the platform observing a remarkable 450% surge in unique NFT buyers between 2020 and 2021. This spike saw the monthly buyer volume soar from 10,000 to 40,000.
However, Q1 2023 marked a low number of NFT holders, possibly traced back to the royalty wrangling between Blur and OpenSea.
Interestingly, up until 2022, there were more buyers than sellers in the NFT market, with a ratio of 1.3 to 1. By 2023, however, there was a shift in the market graph, with sellers outnumbering buyers, signaling a potential change in market behavior and possibly marking the beginning of the NFT market’s second major cycle.
NFT trend analysis
The emergence of several trends marked the 2023 NFT market. Top among them was the reshuffling of major blue-chip NFT projects. Despite initially being profitable, many of these projects started steadily declining due to the bear market that gripped the broader crypto sector in late 2022 and early 2023.
Leading projects such as Bored Ape Yacht Club (BAYC) stood firm against the prevailing bear wave, while others like Azuki struggled initially but later bounced back. In contrast, smaller projects such as Moonbirds took a hit on their profitability immediately after launch and have yet to recover.
2023 also saw what analysts considered a significant evolution in the behavior and profitability of NFT traders. They observed a shift in NFT ownership, with prominent investors increasingly dominating the market. For instance, according to NFTGo, projects like Azuki saw the number of whale owners double.
The next highest whale owner increase was observed in Moonbirds, whose general ownership dropped by 1%, but the number of whales increased by 41%.
Doodles and CLONE X each registered 24% increases in the number of large investors, while CryptoPunks stood at 22%. Among the top NFT projects, BAYC reported the lowest increase in whales at 18%.
Due to their substantial holdings and influence, many felt whales were pivotal in steering NFT market trends in 2023.
Another trend noted in 2023 was the need for more sustainable demand for new NFTs. While projects such as HV-MTL, Otherdeed Expanded, and Otherside Vessel performed steadily, others, like Nakamigos and Checks-VV, needed to sustain early strong momentums.
Another interesting tidbit gleaned from statistics collected by DappRadar was how blockchain games remained the top NFT category, with trading volumes led by Axie Infinity. The game’s NFT collection was the most traded, hitting a market cap of $224 million at one point. Other popular web3 games included NBA Top Shot, Mythical Beings, Gods Unchained, and NFL All Day.
However, at the same time, the market saw floor prices for top NFTs and metaverse land falling significantly. At one point, BAYC floor prices were as low as 24.8 ETH, a stark drop from their 152 ETH peak in Q2 2022.
In December, the NFT market recovered slightly, with Mutant Ape Yacht Club leading the list.
Leading NFT collections | Source: DappRadar
Finally, experts have attributed the NFT market’s growing visibility to the increasing interest of mainstream brands, including Visa and Budweiser. Such firms have strategically acquired existing NFTs instead of generating their own.
The appeal of NFTs to these big brands stems from the potential for additional revenue streams. Moreover, the adoption of NFTs as customer rewards is becoming increasingly prevalent, with such dynamics expected to generate a positive effect across the NFT market and propel its growth trajectory in the new year.
NFT market forecast for 2024
Despite the troubles encountered by NFTs in 2023, many analysts remain bullish about the technology’s prospects heading into 2024.
Here are some key developments they expect to happen that may change the trajectory of NFTs:
NFTs evolving beyond collectibles
Going into 2024, many anticipate a shift in the NFT landscape as it moves from collectibles to utility-driven digital assets. Tokens with real-world applications could mark a crucial change in the NFT paradigm, with such tokens serving as conduits between the digital and physical worlds, offering value beyond artistic appreciation.
GameFi
Analysts also expect the integration of NFTs will change gamification, enabling actual ownership of in-game assets and incentivizing players with rewards for engagement.
Regulatory clarity
The enhancement of crypto regulatory frameworks in the coming year is expected to coincide with the maturation of the NFT crypto market.
Regulators worldwide are developing guidelines to ensure a more secure and transparent environment to build trust and market stability. This could offer a safe environment for NFT creators, traders, and investors to pursue their respective activities.
Integration with defi
There have also been suggestions that NFTs could merge with decentralized finance protocols in 2024, a step many consider revolutionary as it would allow for tokenizing real-world assets as NFTs and connecting traditional finance with crypto.
It could give NFT crypto holders the option to leverage their tokens as collateral for loans or to generate interest via defi platforms, thus representing a considerable leap towards financial inclusivity and asset monetization.
Cross-platform interoperability
Proponents are also banking on improved interoperability between networks such as Cosmos and Polkadot (DOT) to transform the NFT market.
Enabling users to move non-fungible tokens across different blockchains smoothly could expand opportunities for creators and collectors and further reinforce the integration of the digital asset ecosystem.
AI-powered NFTs
Hope is rife in the NFT space that artificial intelligence will personalize the NFT crypto experience, offering tailored engagement, unique creations, and new use cases for the tokens in 2024.
Growth projections
TechNavio’s analysis anticipated the NFT market size to expand at a CAGR of 30.28 between 2024 and 2028 and eventually hit at least $68 billion. The firm’s researchers pegged their optimism on several key drivers, such as escalating interest in digital art and growing use cases for NFTs, including those listed above.
In 2024, TechNavio’s prediction outlined a year-over-year growth in the NFT market cap of at least 23.27%.
Regarding geographical regions, North America and Europe have been at the forefront of NFT adoption. However, statistics collated by Metav.rs looking at NFT consumer behavior showed that Singaporeans, Chinese, and Venezuelans were the most active NFT traders in 2023. Nigeria showed promising potential for future growth, possibly ranging from 13.7% to 35.3%.
Additionally, the Metav.rs figures revealed women in Thailand showed a higher interest in NFTs, with 30% collecting them compared to 23% of men. Notably, 70% of Americans were unaware of what NFTs are, while in France, 3.5% of the population have purchased NFTs, and almost half of the French youth aged 18-24 are open to buying NFTs.
These potential areas of growth come with caveats, regulation being one of them. As governments worldwide take a keener interest in the crypto space, industry watchers expect to see more rules and regulations that could impact NFT markets as well.
FAQs
How big is the NFT market?
The global non-fungible token market size was valued at $20.44 billion in 2022.
How much is the NFT market worth?
The NFT market is expected to grow at a compound annual growth rate (CAGR) of 34.2% from 2023 to 2030.
Is the NFT market growing?
Yes, the NFT market is growing, driven by the distinctiveness, transparency, and security of NFTs, as well as the increasing interest in digital ownership.
What are the key factors driving the growth of the NFTs market?
The growth of the NFT market can be attributed to the rise of social media and digital platforms, the adoption of blockchain technology, and the convergence of traditional industries with the NFT market.
The native token of Casey Rodarmor’s Ordinals Protocol recorded double-digit price gains in 24 hours during the holidays, along with other BRC-20 cryptocurrencies.
ORDI rallied as much as 37% on Dec. 25, with its daily trading volume and market capitalization moving in tandem, per CoinMarketCap. Traders swapped over $900 million worth of the crypto, a 131% increase compared to the previous day.
The crypto commanded a $72 per token price tag as its market cap gained 35% and sat above $1.5 billion at press time. No significant news or development preceded the price movement, although several other Bitcoin (BTC) inscription coins also pumped amid what could be a profit rotation period.
ORDI is underpinned by the Bitcoin Request for Comment (BRC-20) token standard developed by pseudonymous developer Domo. The idea is to enable transferable assets on BTC’s network by allowing users to create and trade tokens on crypto’s largest blockchain, akin to ERC-20 cryptos on Ethereum (ETH) and a defi ecosystem.
Casey Rodarmor started the Ordinals Protocol and its native asset, which is believed to be one of the first Bitcoin inscriptions. The project started in the first half of 2023 and has since grown into a billion-dollar crypto asset. Other BRC-20 tokens have also been issued, and this crypto category now boasts a market cap north of $2.1 billion, according to CoinGecko.
Despite the growing popularity of Bitcoin inscriptions and similar activity on other top-tier blockchains, some developers believe the token standard to be a code bug and argue for its expulsion from crypto’s leading decentralized network.
Bitcoin Core developer Luke Dashjr called inscriptions a fraud and proposed network upgrades to stem BRC-20 issuance on BTC’s network. The issue was also reported to U.S. authorities and recognized as a vulnerability by the National Vulnerability Database.
Still, Inscriptions continue gaining steam across several blockchains, sometimes triggering massive transfer fees and network outage spikes.
A recent development has seen a substantial increase in transaction activities on major Ethereum Virtual Machine (EVM) chains.
According to Etherscan, a widely used blockchain analytics platform, 95% of these transactions can be attributed to inscriptions.
The Ordinals Inscriptions Wave
Ordinals inscriptions, which involve embedding unique data in transaction call data to create non-fungible tokens (NFTs) directly on the blockchain, have increased in popularity.
This new approach allows users to inscribe virtually any digital artifact directly onto a blockchain, including images and texts. Unlike traditional NFTs, which are typically stored off-chain and linked via metadata, these inscriptions are wholly contained within the blockchain.
Did you know? 🤔
95% of the transaction activity on major EVM chains have been Inscriptions for the past few weeks
Let’s take a deeper look into the impact it has had on these chains from the block explorer’s perspective 🧵 pic.twitter.com/8xDanPLydH
This trend was initially noted on the Bitcoin network, but Etherscan’s insights reveal a significant migration of this activity to EVM-compatible chains.
Unlike Bitcoin, where inscriptions are made on satoshis (the smallest BTC unit), Ethereum and other EVM chains perform this function within transaction input data, bypassing the need for the blockchain’s native token unit.
Inscriptions on Ethereum rely on third-party services to index these transactions and apply token rules. Typically, these functions are natively handled by smart contracts within the Ethereum network.
Etherscan notes that this method, while counter-intuitive due to its reliance on third parties for indexing and applying token rules, has not deterred its growing popularity.
Inscription Craze Drives Record $8.3M Gas Fees
Despite feeling counterintuitive, the phenomenon of Inscriptions has been on the rise across EVM chains since mid-November. This surge in activity has led to notable consequences, including a significant increase in daily transactions, skyrocketing gas fees, and longer transaction processing times.
On December 16 alone, the total gas fees spent on inscriptions reached approximately $8.3 million.
This demand has affected Ethereum and other chains like Avalanche, Arbitrum One, and the BNB Chain while also causing operational challenges on the Bitcoin network.
Furthermore, the market implications of this trend are profound. For instance, the Bitcoin Frogs Ordinals collection rapidly emerged as a market leader with a capitalization of $182 million. It saw secondary sales surge to $4.8 million on December 17, indicating a significant market interest.
In a way, the Inscriptions phenomenon can be seen as a good stress test for blockchains and infrastructure providers to assess their limitshttps://t.co/mbfcxT4cKS
Despite the challenges, Etherscan’s post suggests that the Inscriptions phenomenon is an effective stress test for blockchains and infrastructure providers, offering a unique opportunity to assess their limits and adaptability in the face of evolving demands.
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Ordinals critics are wrong in claiming that inscriptions – especially BRC-20 tokens – are a denial of service attack on regular Bitcoin (BTC) transfers, on-chain analysis suggests.
According to lead Glassnode analyst James Check, the vast majority of Bitcoin block space today is still comprised of normal, monetary transactions – with inscriptions “stuffed into any remaining space around the monetary transfers.”
Comparing Ordinals: NFTs VS BRC-20
Glassnode’s figures show that inscriptions share a roughly 50/50 share of total Bitcoin transactions with monetary transfers.
However, the former is generally more efficient on block space than the latter. Using less than 10% of block data size, inscriptions generate between 20% and 40% of the networks’ total fees.
“We are fitting more value, and more fees, and more data into the same block folks,” wrote Check in a post to X on Wednesday. “Inscriptions are good for Bitcoin, they pay miners whilst making space utilization more efficient.”
Inscriptions Share Of Total Bitcoin TX Fees. Source: Glassnode
The fact runs counter to Bitcoiners’ initial understanding of Ordinals as a protocol for inscribing weighty, image-based NFTs into the blockchain.
While that was primarily true earlier this year, the advent of the BRC-20 token standard has led to a “second wave” of tiny, text-based inscriptions. These smaller yet far more frequent inscriptions have vastly expanded Bitcoin’s UTXO set, filled its mempool, and driven transaction fees consistently higher.
A Glassnode report in September highlighted the prevalence of a BRC-20 token called SATS, whose months-long minting process drove a 45.5% increase of 21 million Bitcoin UTXOs. Earlier this week, Binance announced that it would begin listing trading pairs for SATS.
The Ordinals Opposition
The same report described text-based inscriptions as “filler” for blocks, similar to soft newspaper packing stuffed beside large valuable contents inside of a shipping crate. They buy any cheaply available blockspace in a less active block, and are themselves displaced by “more urgent monetary transfers.”
“Your opposition is purely ideological and subjective,” Check told Ordinals critics. “Fortunately, Bitcoin has a set of consensus rules which are objective and do not respond to our feelings or subjective values.”
Bitcoin Core developer Luke Dashjr has repeatedly labeled Ordinals transactions as “spam” that exploit a bug in Bitcoin’s code.
His newly launched Bitcoin mining pool, OCEAN, has opted to filter inscriptions from the transactions it processes to “contribute toward blocks full of real transactions.”
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