Over the past week, a Bitcoin-based BRC-20 meme coin “ORDI” has attracted widespread attention in the crypto community due to its dramatic price fluctuations.

From the Coingecko data in the above figure, in the past month, ORDI, which had been hovering around $20, rose to the $40 price range on November 5 after several climbs, almost doubling, but the market did not seem satisfied. It broke through $60 just one day later and hit a record high of $61 on November 6, with a single-day increase of more than 50%. However, the good news did not last long, and this increase did not last too long. On November 7-8, the price of ORDI fell all the way to below $50, a drop of more than 25%.

Two major reasons for ORDI's "roller coaster" market

1. Potential bull market signals drive ORDI price up

Frankly speaking, many users in the crypto community mistake ORDI, a Bitcoin-based meme coin, for the native token of the Ordinals protocol. Although this misunderstanding was quickly corrected, the price of ORDI did not improve much for quite a long time. If you compare the following two market trend charts, you will find that ORDI has been growing since the beginning of November, which is very consistent with the time when Bitcoin entered the next bull market cycle and rebounded. In recent days, as the price of Bitcoin broke through $44,000, the price of ORDI has risen surprisingly.

2. Bitcoin core developer Luke Dashjr was dissatisfied with the inscription, causing ORDI price to fall rapidly

On December 6, Bitcoin Core developer Luke Dashjr said on social media that "Inscription" is exploiting a vulnerability in the Bitcoin Core client Bitcoin Core to send spam to the blockchain. Since 2013, Bitcoin Core has allowed users to set additional data size limits when forwarding or mining transactions. Inscriptions bypass this limit by obfuscating its data as program code. If the vulnerability is fixed, Ordinals and BRC-20 will no longer exist.

For now, the Bitcoin ecosystem still has two major camps, one is the core developer team, and the other is the miners. Developers are responsible for maintaining software-level work, while miners are responsible for running the network. For example, in the Ethereum network, Vitalik and the Ethereum Foundation represent the developers, while miners run the network.

Developers and miners sometimes have differences, but in most cases core developers tend to have greater market dominance. Generally speaking, the rise in ORDI prices is indeed beneficial to Bitcoin miners. After all, in the current environment where there are fewer use cases for the Bitcoin ecosystem, miners can get more fee income through the ORDI "bull market". In contrast, developers are often more pure. Most of them are technical geeks who want to make technology more flawless and have a longer-term vision. To give a simple example, at the end of 2022, V God and the Ethereum Foundation implemented the "Shanghai" upgrade of Ethereum 2.0, causing all Ethereum miners to exit the stage of history. So once Luke Dashjr's remarks were issued, the result can be imagined-on November 7-8, the price of ORDI fell all the way to below $50, a drop of more than 25%.

Are all ORDI “chips” in the hands of the exchange?

On December 7, the media disclosed that the top 30 ORDI holders held a total of 16.78 million ORDI (about US$950 million), accounting for 79.94% of the total supply. However, the actual situation may not be the case. 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 ORDI market focus may have changed, gradually shifting from "minting" to cryptocurrency exchanges, because ORDI token "chips" are currently basically concentrated in exchanges.

Another thing that needs attention is that there are no holders based on "Foundry" among the top ten ORDI holding addresses mentioned above. It is reported that the holders with the most "Foundry" users are only ranked 19-27, and about half of the top 20 ORDI holding addresses in May came from "Foundry" users. This shows that the main battlefield of ORDI has indeed begun to shift.

Relatively speaking, the exchange giants have actually been preparing for the future and started to make arrangements for the ORDI market in advance. For example, OKX announced the opening of ORDI recharges as early as May this year, and then Binance announced the launch of ORDI on November 7, which was about a month before ORDI skyrocketed.

According to the disclosure, the cryptocurrency exchange Binance currently holds the largest amount of ORDI tokens, with at least 38.4% of ORDI, which is also the current largest holding address; OKX also holds at least 12.2% of ORDI, and other exchanges including Gate, Bybit, MEXC and other second-tier exchanges hold about 10% of the total. (It should be noted that due to the lack of labels on the Bitcoin network, some addresses may be uncertain)

What impact will the ORDI craze have on the Bitcoin ecosystem?

It is undeniable that ORDI price fluctuations have attracted great attention from the crypto community and have also made many people begin to understand the Bitcoin ecosystem. So, what impact will the ORDI craze have on Bitcoin?

First of all, the emergence of ORDI can enhance the value of Bitcoin, making Bitcoin not only a store of value, but also promoting more possibilities for the construction of the Bitcoin ecosystem, bringing new vitality to the Bitcoin ecosystem and promoting the further development of the Bitcoin ecosystem.

Secondly, ORDI also promotes the development of the inscription track and may even promote the development of the second-layer network of the Bitcoin blockchain. Users create off-chain transaction channels in the Layer 2 execution layer and process transactions through off-chain computing methods, thereby improving scalability and throughput while reducing transaction costs.

We know that the Inscription Protocol currently uses the Bitcoin layer network to mint NFTs, allowing users to embed data into the Bitcoin blockchain, and includes Ordinals (a numbering mechanism for Satoshis) and Inscriptions (satoshis engraved with arbitrary content). In essence, it creates non-fungible tokens (NFTs) native to Bitcoin. Although this will increase the transaction volume of the Bitcoin network, it may also bring a certain burden to the Bitcoin network. To solve these problems, a second-layer network built on the Bitcoin main blockchain may emerge.

It is worth mentioning that Binance announced the integration with Bitcoin Lightning Network as early as July this year, allowing users to directly use the second-layer expansion solution to directly withdraw and deposit Bitcoin. Looking back now, this move seems to be preparing in advance to support ORDI transactions. The ORDI craze will undoubtedly attract more development teams to move to Bitcoin L2 for basic layer development. With the next Bitcoin block reward halving approaching, the development of Bitcoin's second-layer network is bound to attract more attention.

Of course, for any emerging project or protocol, there is uncertainty about sustainability and market acceptance. In the current market context of the rapid rise of the "early bull", market fluctuations are a relatively common phenomenon, and participation also requires more caution. But in any case, the ORDI craze has driven more people to pay attention to the construction of the Bitcoin ecosystem. If a more innovative and attractive Layer 2 or other new forms of narrative can be launched, it will undoubtedly be beneficial to the entire crypto industry. Let us wait and see!