A Bitcoin layer-2 executive discussed the decline of previously “overhyped” Bitcoin narratives as the ecosystem evolves.
Declining Bitcoin Narratives
In a Cointelegraph interview, Charlie Hu, co-founder of Bitlayer, identified three Bitcoin narratives that he believes have been oversold, including those regarding Ordinals, layer-2 solutions, and re-staking.
The NFT Hype is Over
One significant overhyped narrative, according to Hu, was non-fungible tokens (NFTs). He mentioned to Cointelegraph that although Bitcoin NFT inscriptions may have experienced a surge, that phase is now “completely gone.”
Significant Volume Drop in Bitcoin NFTs
According to data from CryptoSlam, Bitcoin NFTs recorded a volume of $1.4 billion in Q1 2024, but by Q1 2025, this had plummeted to $280 million, marking an 80% decrease. Hu suggested that the explosive growth days for Bitcoin NFTs are likely behind us, and expecting similarly “crazy” price movements is unrealistic.
Layer-2 Solutions Losing Interest
Additionally, Hu pointed out that interest in Bitcoin layer-2 solutions and re-staking has diminished among venture capitalists. In early 2024, there were around 80 layer-2 networks seeking funding amidst a strong layer-2 narrative, but Hu noted that much of the excitement has since faded.
Concerns Over Layer-2 Sustainability
Other crypto industry leaders echo Hu’s concerns regarding the enthusiasm for layer-2 ecosystems. Stacks co-founder Muneeb Ali remarked on February 20 that the initial excitement surrounding Bitcoin layer-2s has ended, predicting that many projects might not survive as their initial buzz fades.
Optimism for Bitcoin’s Future
Despite the decline of certain hyped narratives, Hu remains optimistic about the evolving Bitcoin ecosystem. He emphasized that layer-2s play a vital role in powering Bitcoin’s decentralized finance (DeFi) sector, potentially providing yield opportunities for Bitcoin holders. He noted, “Bitcoin layer-2s offer programmable, trust-minimized infrastructure that could yield returns for large holders, which is an essential narrative as we explore broader use cases with increased adoption.”
Long-Term Potential of Bitcoin DeFi
Meanwhile, Dominik Harz, co-founder of the hybrid layer-2 Build on Bitcoin (BOB), suggested that Bitcoin layer-2s should be viewed as a long-term investment. He pointed out that Bitcoin DeFi has not fully developed, stating that currently, just 0.3% of Bitcoin’s market cap engages in DeFi, compared to 30% for Ethereum. He believes layer-2s are crucial for the growth of Bitcoin DeFi.
Max Sanchez, CTO of layer-2 protocol Hemi Labs, also disagrees with the notion that Bitcoin layer-2s are losing momentum, arguing that the space is evolving into a maturation phase where fundamentals are gaining importance.
