Stacks price new uptick has everything to do with Bitcoin network’s recent backlog, 50% rise underway?

Stacks (STX) price is bullish despite most players in the crypto arena recording losses. The fresh uptick is attributed to the recent debacle on the Bitcoin backlog, where the Binance exchange reported congestion on the TC network.

Stacks is a Bitcoin layer for smart contracts and decentralized applications (dApps), enabling the use of BTC as an asset and settling transactions on the Bitcoin blockchain. As confirmed by Glassnode, Bitcoin is witnessing extremely high block space demand, so much so that the Binance exchange had to pause BTC withdrawals twice. This was caused by BRC-20 tokens using text-based inscriptions and ordinals.

Also Read: Binance suspends then resumes Bitcoin withdrawals in two hours: Theories and market impact

Stacks price primed for a 50% rally

Stacks, among other Bitcoin Layer 2 protocols like Lightning and Rootstock, have gained attention lately in the wake of the BTC network congestion, presenting an opportunity for the L2s to build. Citing Stacks co-creator Muneeb Ali, this marks the beginning of the arms race to build the best Bitcoin L2s.

As Stacks attempts to improve the Bitcoin network’s expressive smart contract capabilities through L2 technology, STX price could be primed for a northbound move. At the time of writing, the Bitcoin L2 token is auctioning at $0.77, a daily rise of 7%. The token is up 1.5% on the hour and 7.1% over the last week.

The Fair Value Gap (FVG) on the one-day timeframe between the March 23 lower wick and March 25 upper wick has left an imbalance that has to be filled. Fair Value Gaps are created within a three-candle sequence and are commonly visualized on the chart as a large candle whose neighboring candles’ upper and lower wicks do not fully overlap the large candle.

With this vacuum acting as a magnet, Stacks price could rise 53% to tag the $1.17 resistance level, thereby filling the inefficiency highlighted in pink. Notably, this speculation hinges upon whether the current Bitcoin network demand will be sustained long enough.

In a highly bullish case, Stacks price could extend a leg up to collect buy-side liquidity above the aforementioned level.

The Relative Strength Index (RSI) trajectory upholds the bullish thesis, tipping upwards and about to cross into the positive zone. This hints at more buyers approaching the STX market and Stacks price could increase. 

STX/USDT 1-Day Chart

On the downside, if profit takers begin hedging their STX holdings, Stacks price could switch to the gains-shedding gear. The move could see the altcoin drop toward the immediate support level at $0.67 or, in the dire case, fall below this level toward the $0.28 support floor.