After Bitcoin (BTC) underwent the Taproot rollout, the feature is recording a spike in utilization, partly contributing to the cryptocurrency’s bullish price outlook.
In particular, as of February 16, Bitcoin’s Taproot adoption hit a new high of 13%, just a week after value stood in the single digits, data by crypto analysis platform Glassnode shared by Will Clemente, the founder of the research firm Reflexivity Research indicates
Notably, as of February 8, the adoption stood at just 5% on a seven-day moving average (MA) for the feature that went live after an upgrade in late 2021.
Drivers behind Bitcoin Taroot adoption
It is worth pointing out that Taproot’s usage on the Bitcoin blockchain coincided with Ordinals’ increasing popularity on the network. The Ordinals protocol uses Taproot to include data in the witness portion of BTC transactions.
Ordinals enable users to attach items like images to BTC transactions, resulting in the emergence of non-fungible tokens (NFTs) on the Bitcoin blockchain. With the growing demand for NFTs, Taproot has seen a significant rise in usage.
Ordinals protocol was made feasible by Bitcoin’s network soft fork upgrades, Segregated Witness (SegWit) and Taproot, released in 2017 and 2021, respectively.
The adoption is significant for Bitcoin, considering it’s among the closely monitored aspects of the network. Indeed, Taproot is a key part of the Bitcoin ecosystem, considering it aims to enhance blockchain scalability and privacy while maintaining security and decentralization.
The feature also offers advanced privacy elements such as Schnorr Signature aggregation and virtual output locking. These features enable secure and cost-effective transactions by allowing users to combine multiple inputs into a single output, which reduces transaction fees.
Bitcoin price analysis
As Bitcoin registered increased activity on the Taproot adoption, the maiden cryptocurrency appears to have move past the recent downturn that was triggered by increased regulatory scrutiny. By press time, Bitcoin was trading at $24,505 with daily gains of over 7%.
Elsewhere, Bitcoin’s one-day technical analysis on TradingView has turned bullish. A summary of the gauges is for a ‘buy’ at 16, while moving averages are for a ‘strong buy’ at 14. The oscillators are neutral at 7.
It is expected that Bitcoin will likely extend the rally further if the asset breaches the $25,000 resistance.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
