In the past week, the BRC-20 meme coin “ORDI,” based on Bitcoin, has garnered widespread attention in the crypto community due to its drastic price fluctuations.
According to the Coingecko data shown in the graph above, ORDI, which had been hovering around $20 for the past month, experienced several surges and reached the $40 price range on November 5, almost doubling its value. However, the market seemed unsatisfied, and just a day later, it surpassed $60, reaching a new all-time high of $61 on November 6, with a daily increase of over 50%. Unfortunately, this surge didn’t last long, and on November 7-8, the price of ORDI plummeted to below $50, experiencing a decline of over 25%.
The two main reasons behind the roller coaster ride of ORDI are revealed below:
1. Potential bull market signals driving the rise in ORDI price
To be frank, many users in the crypto community mistakenly believed that ORDI, a Bitcoin-based meme coin, was the native token of the Ordinals protocol. Although this misunderstanding was quickly corrected, the price of ORDI did not see significant improvement for quite some time. By comparing the two market trend charts below, you will notice that ORDI started showing a growth trend in early November, which coincided with Bitcoin entering the next bull market cycle and experiencing a price rebound. In recent days, with Bitcoin’s price surpassing $44,000, the surprising price increase of ORDI has occurred.
2. Dissatisfaction of Bitcoin core developer Luke Dashjr leading to a rapid decline in ORDI price
On December 6, Bitcoin core developer Luke Dashjr stated on social media that “Inscriptions” was exploiting a vulnerability in the Bitcoin Core client to send spam messages to the blockchain. Since 2013, Bitcoin Core has allowed users to set additional data size limits when forwarding or mining transactions. By obfuscating their data as program code, Inscriptions bypassed this limit. If this vulnerability is fixed, both Ordinals and BRC-20 will cease to exist.
Currently, the Bitcoin ecosystem still consists of two main factions: the core development team and the miners. Developers are responsible for maintaining the software, while miners operate the network. For example, in the Ethereum network, Vitalik Buterin and the Ethereum Foundation represent the developers, while miners run the network.
Developers and miners sometimes have disagreements, but in most cases, core developers tend to have greater market dominance. Generally speaking, the rise in ORDI price is indeed beneficial to Bitcoin miners. After all, in the current environment with few use cases for Bitcoin, miners can earn more fee income through the ORDI “bull market.” On the other hand, developers are usually more focused on purity and often consist of technical geeks who want to make technology more flawless and have a longer-term vision. For example, at the end of 2022, Vitalik Buterin and the Ethereum Foundation executed the “Shanghai” upgrade of Ethereum 2.0, causing all Ethereum miners to exit the stage of history. Therefore, when Luke Dashjr’s statement was made, the result was predictable – the price of ORDI plummeted to below $50 on November 7-8, with a decline of over 25%.
Are all the ORDI “chips” in the hands of exchanges?
On December 7, it was reported that the top 30 ORDI holders collectively held 16.78 million ORDI (approximately $950 million), accounting for 79.94% of the total supply. However, the actual situation may not be as stated. According to the analysis of the top ten ORDI addresses, five of them belong to exchanges such as Binance, OKX, and Gate. This means that the current focus of the ORDI market may have shifted from being primarily “minted” to cryptocurrency exchanges, as the majority of ORDI tokens are now concentrated in exchanges.
Another point to note is that there are no “minting”-based holders among the top ten ORDI holding addresses. It is reported that the holders with the highest number of ORDI among “minting” users are only ranked 19-27. In May, about half of the top 20 ORDI holding addresses came from “minting” users. This indicates that the main battlefield of ORDI has indeed shifted.
In contrast, the exchange giants have been preparing for the ORDI market early on. For example, OKX announced the opening of ORDI deposits as early as May this year. Subsequently, Binance announced the listing of ORDI on November 7, which was about a month before the explosive rise of ORDI.
Disclosed information shows that Binance currently holds at least 38.4% of ORDI, making it the largest holder; followed by OKX, which holds at least 12.2% of ORDI. Other exchanges, including Gate, Bybit, and MEXC, hold a total of about 10% of ORDI. (It should be noted that due to a lack of tags on the Bitcoin network, there may be some uncertainty regarding certain addresses.)
What impact will the ORDI craze have on the Bitcoin ecosystem?
Undeniably, the price fluctuations of ORDI have attracted significant attention in the crypto community and have also led many people to learn about the Bitcoin ecosystem. So, what impact will the ORDI craze have on Bitcoin?
Firstly, the emergence of ORDI can enhance the value of Bitcoin, making it not only a store of value but also pushing for more possibilities in building the Bitcoin ecosystem. This, in turn, brings new vitality to the Bitcoin ecosystem and promotes its further development.
Secondly, ORDI also promotes the development of the Inscriptions track and may even drive the development of the Bitcoin blockchain’s second layer network. Users can create off-chain transaction channels at the Layer 2 execution layer and process transactions through off-chain computation, thereby improving scalability, throughput, and reducing transaction costs.
Currently, the Inscriptions protocol uses the Bitcoin layer 1 network to mint NFTs, allowing users to embed data into the Bitcoin blockchain, including Ordinals (a numbering mechanism for Satoshis) and Inscriptions (Satoshi’s arbitrary content). Essentially, it creates Bitcoin-native non-fungible tokens (NFTs), which may increase the transaction volume on the Bitcoin network but also potentially burden the Bitcoin network. To address these issues, second-layer networks built on the Bitcoin main blockchain may emerge.
It is worth mentioning that Binance announced its integration with the Bitcoin Lightning Network as early as July this year, allowing users to directly use the Layer 2 scaling solution for Bitcoin withdrawals and deposits. Looking back now, this move seems to have been made in preparation for supporting ORDI transactions. The ORDI craze will undoubtedly attract more development teams to shift their focus to Bitcoin Layer 2 for base layer development. Coupled with the upcoming halving of Bitcoin block rewards, the development of the Bitcoin second-layer network is bound to attract more attention.
Of course, for any emerging project or protocol, sustainability and market recognition are uncertain. In the current market context of rapid surges, market fluctuations are quite common, and participation also requires greater caution. However, regardless of the circumstances, the ORDI craze has attracted more attention to the construction of the Bitcoin ecosystem. If more innovative and attractive Layer 2 or other new forms of narratives can be introduced, it will undoubtedly benefit the entire crypto industry. Let us wait and see!
