Bitcoin’s NFT and Layer 2 Dreams Just Met a Harsh Reality

Last year, some dreamed of perverting Bitcoin with flashy NFTs, magical layers 2, and convoluted re-staking. Purists were outraged, arguing that BTC should be left alone. Should we have waited? Clearly yes: today, these crypto whims are almost extinguished. While the fires of innovation crackled, the hype has subsided. But what remains of these promises now vanished?

Bitcoin loses its sparkle: the vanished promises of layers 2 and NFT

In the crypto universe, certain concepts have a habit of dancing and then taking their bow. Such is the case of Ordinals, these Bitcoin NFTs that made wallets vibrate. In 2024, their volume reached 1.4 billion dollars. In 2025? Barely 280 million. A free fall of 80%.

The same fate for Bitcoin’s layers 2: at the beginning of 2024, more than 80 projects tried to charm investors and the media. Six months later, the soufflé has collapsed. “It was overestimated from the start,” confides Charlie Hu, co-founder of Bitlayer.

Also lagging behind: re-staking, this clumsy innovation now reduced to two or three survivors. Muneeb Ali, founder of Stacks, drives the nail home : “the honeymoon is over.”

Crypto entrepreneurs are starting to speak the truth. Too late?

• Bitcoin NFT Volume Q1 2024: $1.4 billion.
• Volume Q1 2025: $280 million.
• Layer 2 Projects early 2024: more than 80.
• Viable projects today: a handful.

Has the crypto market become allergic to its own excesses?

DeFi on Bitcoin: an untapped potential

However, amidst the debris of hype, one idea seems to hold its ground: Bitcoin DeFi. Some envision it as a more solid alternative, less flashy. Dominik Harz (Build on Bitcoin) states it bluntly :

The Bitcoin DeFi has not yet taken off.

To date, 0.3% of Bitcoin’s market cap fuels DeFi uses, compared to 30% for Ethereum. A chasm of x100.

But the foundations are there. Thanks to technologies like zkBTC, transactions are becoming ultra-fast, low-cost, and programmable. The future? Perhaps in the fusion between the Bitcoin blockchain and the agility of DeFi.

Some, like @SamaAlbert90, already speak of a “new financial era“.

The prediction of the BitcoinOS CEO? A DeFi ecosystem on Bitcoin valued at $10 billion if Ethereum stumbles. And why not? If layers 2 become performance-serving architectural tools, investments could follow.

Is the flagship crypto ready to become a base for sustainable financial innovations?

Bitcoin vs Ethereum: two visions of decentralized finance

The cold war continues between Bitcoin and Ethereum, each camp holding onto its ambitions. Ethereum is preparing its “Hoodi” update , crucial for its scalability. If it fails, Bitcoin could scoop the pot. It would be a turning point. With its new technical layers (zkRollups, EVM compatible), Bitcoin offers attractive solutions.

Maxwell Sanchez (Hemi Labs) reminds us that copying and pasting Ethereum’s tech is not enough: “It must adapt to the very core of Bitcoin.” Translation: there’s no need to force a square into a round hole. The Bitcoin network must grow in its own way.

On Ethereum’s side, the pressure is high. Every major update is a risky promise. The complexity of “Hoodi” could create more problems than solutions. Meanwhile, Bitcoin is refining its vision, developing its layer 2 protocols, and waiting for its rival’s misstep.

Who will win the duel of the titans in the crypto market? The one who convinces developers, users, and investors over the long term. And you, who are you betting on?

Despite their apparent discredit, Bitcoin’s layers 2 could very well explode . A recent report from the Spartan Group discusses their explosive potential in the medium term… to be continued.