Bitcoin NFTs, Layer-2, and Restaking Hype Have Completely Faded
Quick Summary
Bitcoin narratives around NFTs, layer-2 solutions, and restaking have significantly declined after initial hype. Industry executives suggest the market is shifting from short-term excitement to long-term development and adoption.
Key Points
- Bitcoin NFTs saw an 80% drop in trading volume from $1.4 billion in Q1 2024 to $280 million in Q1 2025.
- Layer-2 and restaking narratives have also lost momentum, with fewer projects surviving after initial excitement.
- Industry leaders emphasize the long-term potential of Bitcoin DeFi and layer-2 solutions despite fading short-term hype.
Bitcoin NFTs Lose Momentum
Charlie Hu, co-founder of Bitlayer, highlighted that Bitcoin NFTs, once highly popular, have seen their hype “completely gone.” Data from CryptoSlam confirms an 80% decline in NFT trading volume year-over-year, indicating the end of the explosive growth phase.
Layer-2 and Restaking Narratives Fade
Hu also noted a significant reduction in investor interest around Bitcoin layer-2 solutions and restaking projects. Initially, around 80 layer-2 projects sought funding in early 2024, but the excitement has since dissipated. Similarly, only a few restaking projects remain active after the peak hype.
Stacks co-founder Muneeb Ali echoed this sentiment, stating that the “honeymoon phase” for Bitcoin layer-2s is over, predicting many projects will disappear as initial enthusiasm fades.
Long-Term Potential Remains Strong
Despite the fading hype, industry executives remain optimistic about Bitcoin’s long-term potential, particularly in decentralized finance (DeFi). Hu emphasized that layer-2 solutions are crucial infrastructure for Bitcoin DeFi, enabling yield opportunities for institutional investors and large Bitcoin holders.
Dominik Harz, co-founder of Build on Bitcoin (BOB), stressed that Bitcoin DeFi is still in its infancy, with only 0.3% of Bitcoin’s market cap currently active in DeFi compared to Ethereum’s 30%. He believes this gap will narrow significantly as Bitcoin DeFi matures.
Max Sanchez, CTO of Hemi Labs, also sees the current phase as a maturation period, emphasizing the importance of interoperability and adapting Ethereum-based technologies specifically for Bitcoin’s unique architecture.
Conclusion
While short-term excitement around Bitcoin NFTs, layer-2 solutions, and restaking has faded, industry leaders remain confident in the long-term growth and adoption of Bitcoin’s DeFi ecosystem and underlying technologies.
