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The sentiment that surrounded Bitcoin (BTC), the world's largest cryptocurrency by market capitalization, has also had a ripple effect on the Lightning Network, the Layer 2 protocol built on BTC to bolster payment efficiency. According to data from The Block's dashboard, the Lightning Network printed a new all-time high (ATH) in its U.S. dollar capacity from inception to date.
Zooming in on data
Per the data, Lightning Network has finally breached a record-high capacity of 5,630 BTC worth approximately $172 million for the first time since April. While that growth has proven the high adoption of the Lightning Network, the protocol's Bitcoin capacity has soared as high as 42% while the capacity in U.S. dollar is up by a massive 105%.
That more BTC are now locked on the network is a testament to the positively growing perception of users on the proficiency of the cryptocurrency to serve as an alternative payment method.
The launch of the Lightning Network was aimed at addressing some of the key woes of the premier blockchain as it concerns high fees and slow speed. Lightning Network is notably faster and cheaper, and it represents to the Bitcoin ecosystem what Layer 2 protocols like Arbitrum (ARB) and Polygon (MATIC) are to the Ethereum (ETH) blockchain.
Over the course of the past year, many prominent platforms have integrated the protocol to better serve their communities.
Impact on Bitcoin's outlook
The total funds being locked in the Lightning Network payment rails are not necessarily truly locked, as we see in decentralized finance (DeFi) funds.
However, the locking introduces scarcity, which in turn can impact the underlying growth trends of the cryptocurrency. Bitcoin is seeing heightened sentiment following the spot Bitcoin Exchange Traded Fund (ETF) application made by BlackRock and Fidelity Investments, among others, and the new records printed by the Lightning Network can generally compliment sentiment across the board.
Bitcoin is changing hands at a price of $30,321.20, down by 1.08% over the past 24 hours.
Mushumir Butt
Tomiwabold Olajide
