Bitcoin NFTs and Layer-2 Hype: A Decline in Interest | 2025
Bitcoin NFTs and Layer-2 Hype: A Decline in Interest
In a recent interview with Cointelegraph, Charlie Hu, co-founder of Bitlayer, shed light on three Bitcoin narratives that he believes have been significantly overhyped. These narratives include non-fungible tokens (NFTs), layer-2 solutions, and re-staking. According to Hu, while Bitcoin NFTs experienced a meteoric rise, that era is now ‘completely gone.’
The Rise and Fall of Bitcoin NFTs
Hu pointed out that although Bitcoin NFTs saw an impressive volume of $1.4 billion in the first quarter of 2024, this figure plummeted to just $280 million in the first quarter of 2025, marking an astonishing 80% drop. This decline suggests that the days of 1,000x returns on Bitcoin NFTs are likely over, and investors should not expect similar ‘crazy’ price performances in the future.
According to CryptoSlam, the NFT market on Bitcoin has cooled significantly, leading many to question the sustainability of this trend. Hu’s insights resonate with a broader sentiment in the crypto community, where many executives and entrepreneurs are beginning to acknowledge the fading hype surrounding Bitcoin NFTs.
Layer-2 Solutions: A Diminishing Narrative
In addition to Bitcoin NFTs, Hu highlighted the waning excitement around Bitcoin layer-2 solutions. At the start of 2024, there were at least 80 layer-2 networks vying for funding, as the narrative surrounding these solutions was particularly strong. Many projects pitched their ideas to investors, media, and various communities, but Hu believes that the initial hype has since dissipated.
Echoing Hu’s sentiments, Muneeb Ali, co-founder of Stacks, remarked on February 20 that the ‘honeymoon phase’ for Bitcoin layer-2s has come to an end. As the initial excitement fades, many projects may struggle to maintain momentum. This shift in perception indicates a critical juncture for Bitcoin layer-2 solutions, as the market reassesses their long-term viability.
The Challenges of Re-staking
Hu also pointed out that the narrative surrounding Bitcoin re-staking has experienced a significant decline. Currently, only 2 to 3 projects remain active after the peak of this narrative’s hype phase in 2024. This decline raises questions about the sustainability of re-staking as a viable strategy within the Bitcoin ecosystem.
Looking Ahead: Opportunities in the Bitcoin Ecosystem
Despite the fading hype around these narratives, Hu remains optimistic about the future of the Bitcoin ecosystem. He believes that while layer-2 solutions are essential, they should be viewed as an engine that powers Bitcoin’s decentralized finance (DeFi) ecosystem. This perspective opens up new avenues for holders to explore yield opportunities within the Bitcoin space.
Dominik Harz, co-founder of the hybrid layer-2 Build on Bitcoin (BOB), echoed Hu’s optimism, stating that Bitcoin layer-2s should be regarded as a long-term investment. ‘Looking at Bitcoin layer-2s through a short-term lens misses the point. Hype cycles come and go, but lasting developments in crypto, like Bitcoin itself, are inherently long-term plays,’ Harz explained.
The Untapped Potential of Bitcoin DeFi
Harz further emphasized that Bitcoin DeFi has not yet reached its full potential. He noted that only 0.3% of Bitcoin’s market cap is currently active in DeFi, compared to a staggering 30% for Ethereum. This 100x discrepancy indicates that there is significant room for growth as Bitcoin DeFi begins to gain traction.
As the Bitcoin ecosystem matures, Harz believes that layer-2 solutions will play a crucial role in facilitating the growth of Bitcoin DeFi. He stated, ‘The space is entering a maturation phase where fundamentals matter.’ This shift in focus towards the underlying technology and its applications could pave the way for a more robust and sustainable Bitcoin ecosystem.
Adapting Technology for Bitcoin’s Unique Architecture
Many early projects in the Bitcoin layer-2 space have attempted to adopt technology from Ethereum without adequately adapting it to Bitcoin’s unique architecture. This oversight may have contributed to the challenges faced by these projects as they navigate the evolving landscape of the crypto market.
In conclusion, while the hype surrounding Bitcoin NFTs, layer-2 solutions, and re-staking may be waning, there are still promising opportunities within the Bitcoin ecosystem. As industry experts like Hu and Harz highlight, the focus should shift towards long-term developments and the potential for Bitcoin DeFi to flourish. The future of Bitcoin may depend on how well the community can adapt and innovate in response to these changing dynamics.
