Litecoin Hits ATH in Transaction Volume as BRC-20 Drives Bitcoin Fees to New Heights

With Bitcoin transaction fees reaching a two-year high due to the BRC-20 token craze, Bitcoin (BTC) users are increasingly turning to Litecoin (LTC).

On May 9, Litecoin (LTC) saw its transaction volume soar to an all-time high, driven by the surge in Bitcoin (BTC) fees resulting from the new BRC-20 tokens.

According to data from BitInfoCharts, Litecoin processed up to 525,000 transactions on May 9, coming close to Bitcoin's 575,000 transactions. This figure represents a fivefold increase over Litecoin's daily average for 2023 and is double the previous record set in January 2018.

Comparison of Bitcoin (green) and Litecoin (orange) transaction volumes as of May 9, 2023. Source: BitInfoCharts

Data from Glassnode reveals that the number of active Litecoin wallets hit a new record of 718,000 on May 8, with 500,000 new wallets created recently.

The surge in Litecoin transactions can be attributed to the Bitcoin network being overwhelmed by BRC-20 token transactions, which have driven fees to their highest levels in two years. Litecoin offers a technical alternative to Bitcoin, featuring similar attributes but with lower fees.

BRC-20 is a new token issuance method created on Bitcoin in March 2022 using the Bitcoin Ordinals protocol. It allows users to encode text segments into the Bitcoin blockchain, which can be used to create NFTs and, more recently, sequences associated with a token code to form a new token on the Bitcoin network.

Despite Bitcoin’s lack of support for smart contracts or advanced programming features, BRC-20 tokens face limitations in issuance and trading. However, due to the current investment frenzy, the total market capitalization of BRC-20 tokens has approached $1 billion just two months after their introduction.

The surge in Bitcoin network usage has led to higher transaction fees and congestion. Earlier this week, Binance had to suspend BTC withdrawals twice due to transaction bottlenecks, resolving the issue by increasing miner fees. Bitcoin miner revenue from fees has also exceeded block rewards for the first time since 2017.

Despite this, LTC’s price remains subdued, influenced by Bitcoin’s overall trend, even with Litecoin's upcoming halving event scheduled in about 90 days.