Bitcoin Lightning Network growth jumps 1,200% in 2 years

October 11, 2023 Coin Telegraph

A report from the Bitcoin-only exchange River suggests increased Lightning usage will play a key role in Bitcoin becoming a better medium of exchange.

Bitcoin’s layer 2 Lightning Network has seen an estimated 1,212% growth in two years, with around 6.6 million routed transactions in August, a significant jump compared to August 2021’s 503,000 transitions, according to data from the Bitcoin (BTC)-only exchange River.

In an Oct. 10 report, River research analyst Sam Wouters explained the jump in routed transactions — which use more than two nodes to facilitate a transfer — came despite a 44% fall in Bitcoin’s price and considerably less online search interest.

“‘Nobody is using Lightning’ should now be a dead meme,” Wouters said in an Oct. 10 follow-up X (Twitter) post, taking a shot at Lightning critics.

“Nobody is using Lightning” should now be a dead meme.

Launching a new #Bitcoin report from @River: How the Lightning Network grew by 1212% in 2 years ⚡

It’s time to pay attention to the incredible work of so many people in the space Link below in the pic.twitter.com/FuGLwGHR4R
— Sam Wouters (@SDWouters) October 10, 2023

River’s 6.6 million figure for Lightning routed transactions is a lower-bound estimate — the smallest possible value it could assess. The firm also sourced August 2021’s 503,000 figure from a 2021 study by K33, formerly Arcane Research and added it could not assess private Lightning transactions or those between only two participants.

*Estimated growth of monthly routed Bitcoin Lightning transactions. Source: River*

$78.2 million in transaction volume was also processed on Lightning in August 2023, marking a 546% increase from August 2021’s $12.1 million figure sourced by K33. Wouters noted that Lightning is now processing at least 47% of Bitcoin’s on-chain transactions.

“This will be an interesting metric to monitor,” he added. “It is an indicator of Bitcoin becoming more of a medium of exchange.”

*Estimated growth of monthly routed Bitcoin Lightning transaction volume. Source: River*

In August 2023, the average Lightning transaction size was around 44,700 satoshis or $11.84. River estimated between 279,000 and 1.1 million Lightning users were active in September.

The firm attributed 27% of transaction growth to the gaming, social media tipping and streaming sectors.

River said the Lightning payments success rate was 99.7% on its platform in August 2023 across 308,000 transactions. The main reason for failure occurs when no payment route can be found that has enough liquidity to facilitate the transfer.

River’s data set consisted of 2.5 million transactions. The nodes in River’s data set represent 29% of all the capacity on the network and 10% of payment channels.

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Large institutions sold $5.5B in BTC since May — and we’re still here

July 22, 2022 Coin Telegraph

<div>Large institutions sold .5B in BTC since May — and we're still here</div>

Arcane Research

Massive sell-offs from institutions appear to have been the driving force behind the drop in Bitcoin price since May, according to an analyst from Arcane Research.

Since May 10, as much as 236,237 Bitcoin (worth $5.452 billion) has been sold by “large institutions” — mostly as a result of forced selling.

A Twitter thread from Arcane Research analyst Vetle Lunde details how and when many institutional Bitcoin holders began selling their stacks. Lunde stated that “it all started with Do Kwon.”

The Luna Foundation Guard (LFG), which controlled funds for the Terra project, dumped 80,081 BTC in a failed effort to protect the peg of its native Terra USD (UST) stablecoin in May.

Terra’s collapse appears to have made some Bitcoin (BTC) miners face sell pressure. Lunde estimates that miners sold 19,056 coins between May and June. In some cases, miners were selling more than their monthly production, likely drawing from reserves.

The Luna Foundation Guard (LFG), which controlled funds for the Terra project, dumped 80,081 BTC in a failed effort to protect the peg of its native Terra USD (UST) stablecoin in May.

Terra’s collapse appears to have put pressure on some Bitcoin miners to sell. Lunde estimates that miners sold 19,056 coins between May and June. In some cases, miners were selling more than their monthly production, likely drawing from reserves.

Lunde noted that as miner selling peaked, Elon Musk’s Tesla also hit the red button and sold 29,060 BTC by the end of Q2. At the same time, the Three Arrows Capital (3AC) crypto investment firm was over-leveraged and owed lenders 18,193 BTC and coins equivalent to 22,054 BTC.

Lunde also added that a massive 24,510 BTC redemption took place at the Canadian Purpose Bitcoin exchange-traded fund (ETF) in late June, “creating further fire sale pressure in the market.” That redemption accounted for 51% of that ETF’s holdings.

BTC market growth

Despite the crypto markets seeing tremendous sell pressure from institutions in recent months, the Bitcoin market remains remarkably resilient.

Trading volumes have also remained higher through the 2022 market downturn compared to the peak of the 2017 bull market. On December 17, 2017, Bitcoin daily trading volume reached a cycle peak of $12 billion, while daily volume in July 2022 has been above $20 billion according to CoinGecko.

CEO of Singapore-based market maker Presto Labs Yongjin Kim agreed with Lunde that liquidations from 3AC and others caused the significant price drop in June, but believes the BTC price will return to $30,000 within the next few months.

He told Cointelegraph on July 21 that “those liquidations pushed Bitcoin price below the fundamental equilibrium price,” leading him to believe that prices will return “to $30,000 in the next few months.”

Kim added that it will take time for retail investors to regain their confidence in crypto after what they endured over the past few months and that institutional investments will rise again.

“I think the retail sentiment is completely broken, so it will take some time before we restore confidence in the market. But there will be some reversal by the end of this year counteracting the liquidations.”

Lunde concluded his thread by stating:

“I tend to lean in favor of forced selling and contagion-related uncertainty being done for now. We will likely slump, pump, and dump in choppy conditions in the coming period.”

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War coincides with Bitcoin’s highest ‘real’ volume since early December

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Arcane Research

“Investors are speculating that crypto will become increasingly important apolitical and trustless money in a time of escalating geopolitical uncertainty, conflict, and capital controls,” Arcane Research wrote.

The “real” daily Bitcoin (BTC) volume spiked to levels not seen for three months amid the Russian invasion of Ukraine.

According to the latest weekly update report from blockchain analytics firm Arcane Research, real daily BTC trading volume surged above the $10 billion last Thursday (Feb. 24, the first day of the invasion), marking the highest daily volume recorded since Dec. 4.

The firm cited “new crypto narratives” that have risen to the forefront amongst the ongoing crisis, such as crypto fundraising in Ukraine, along with demand increasing in relation to the western block and Russia introducing “the strictest capital controls in decades.”

Strong selling pressure from investors looking to take risk off the table on Feb. 24 may also have contributed to the surge in daily BTC volume, as the price dipped 10% on that day.

The term “real trading volume” refers to data sourced from exchanges that are believed to be reputable and free of wash trading activities. In this instance, Arcane Research pulled its figures from the Bitwise 10 exchanges (consisting of names such as Coinbase, Kraken, Poloniex and Binance) along with LMAX and FTX.

*Real daily BTC trading volume: Arcane Research*

In comparison, crypto data aggregators such as Coingecko — who draw data from more than 500 exchanges — had BTC’s trading volume on Feb. 24 at around the $25 billion region. Messari’s real BTC volume chart (which includes a number of additional exchanges) paints a similar picture to Arcane’s, recording a spike to around $11.6 billion worth of volume last Thursday.

Since Feb. 24, the real daily BTC volume has dipped to around $7.5 billion as of March. 1 according to data from Messari. Th

Arcane Research also highlighted that the price of BTC saw its largest daily percentage gain in over a year on Feb. 28, with the price jumping 14.5% in the space of 24 hours. The firm attributed the surge in part to Russian and Ukrainian crypto adoption (although the actual volume is relatively small in global terms) along with increased speculation on crypto’s use cases amid the current Russian invasion:

“Investors are speculating that crypto will become increasingly important apolitical and trustless money in a time of escalating geopolitical uncertainty, conflict, and capital controls. This speculation may have contributed to the 15% increase in the Bitcoin price over the past seven days.”

Crypto in Ukraine and Russian

With financial services and markets severely disrupted in both Russia and Ukraine, there has been flow on effects for the use of cryptocurrencies.

The report pointed to data from last month showing a significant surge in crypto purchases from Ukrainian citizens.

Around the time the full scale Russian invasion began on Feb. 24, daily Tether (USDT) stablecoin purchases on Binance via the Ukrainian hryvnia (UAH) increased from around $2.5 million to as high as roughly $8.5 million by Feb. 25. While the BTC/UAH chart showed a similar trajectory, surging from around $1 million to $3.0 million within that time frame.

*Daily UAH crypto purchases: Arcane Research*

A similar phenomenon occurred in Russia as well, with Ruble based purchases of USDT climbing from around $15 million on Feb.21 to as high as $34.94 million on Feb. 28. Daily Bitcoin purchases also jumped from below $5 million to as high as $15 million on Feb. 25, before dipping back to around the $12 million range.

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Arcane Research predicts 700 million Lightning Network users by 2030

October 8, 2021 Coin Telegraph

Arcane Research

Arcane Research says that Lightning Network usage has been on a steep upwards trajectory since late last year, but in September growth went parabolic off the back of El Salvador's Bitcoin adoption.

The research unit of Arcane Crypto predicts the Lightning Network will go parabolic as adoption of the Bitcoin layer-two payment protocol ramps up over the decade.

Arcane Research published the “State of Lightning” report on Oct. 5, and analyzed the Lightning Network in terms of current capacity, wallet payment volume, the growing rate of adoption, and the switch from online services to everyday usage.

The report provides ambitious estimates for the future of the Lighting Network, such as 90% of Salvadorians over the age of 15 having access to Lightning payments by 2026, and 50 million Lightning users, representing $17 billion in annualized payments, for things like remittances and household expenditure by 2030.

Arcane sees gaming and streaming video and audio as a major use case for Lightning with streaming companies such as Spotify or Netflix able to utilize the network for micro-transactions to offer pay per minute, or persecond streaming services, representing an “enormous” chance to onboard new Lightning users.

It forecasts 700 million users in these categories by 2030. Using an estimate of 1 hours per day on these services, and 25% of the time spent on those with Lightning payments, Arcane assumes there will be one micro-transaction per second:

"Our estimate then equals no less than 364 trillion Lightning transactions per year," the report says.

The research was conducted in collaboration with Bitcoin payments company OpenNode, and highlights how usage of the Lightning Network sharply increased since late last year. El Salvador’s adoption of Bitcoin (BTC) on Sept. 7 propelled the network ever further:

“In September 2021 growth went parabolic. This was driven mainly by the introduction of Bitcoin as legal tender in El Salvador.”

The report also highlights the significance of peer-to-peer crypto exchange Paxful enabling Lighting payments to its user base of 7 million last month, as well as Twitter’s integration with the network by launching a BTC tipping service for its 186 million users.

Current capacity

Since Lighting went live on Bitcoin nearly three years ago the network has grown to hold a capacity of almost 3,000 BTC, with 17,000 nodes operating on the network and 73,700 unique channels.

“As of writing, the public Bitcoin capacity on Lightning equals more than $120 million, with users across the world finding value in the option to conduct near-instant small payments at very negligible fees,” the report read.

But while publicly available metrics such as total channel capacity show rapid growth in adoption, wallet payment volumes have far out performed that metric since August.

“We have focused on mainstream usage through wallet providers, as we believe this is the best measuring stick of adoption. Therefore, the estimated numbers do not contain the activity from developers, channel rebalancing, most b2b transactions, etc,” the report read.

According to Arcane, wallet payment volume has increased by 20% month-over-month since August, which far exceeds the monthly growth rate of 10% from the metric of channel capacity.

“In September, the discrepancy widened further, with payment volume almost doubling compared to a 26% increase in public channel capacity,” the report read.

El Salvador and other countries

Arcane estimates that close to 90% of the population from El Salvador 15 years or older will have access to Lightning payments by 2026.

The estimate relies on a range of central assumptions such as a 15% yearly growth rate of internet adoption previously seen in 2018 and 2019, along with president Nayib Bukele’s figure of 2.1 million Chivo wallet users from September being correct.

The report predicts that if other countries with “poor banking access” can follow the suit of El Salvador, there could be 50 million Lightning users who would represent $17 billion in annualized payment volume on the network by 2030.