North Rock Digital, a player in the digital asset hedge fund space, recently made a bold prediction regarding the altcoin Stacks (STX). In a statement issued on
“When we look for long ideas, we focus on ideas with strong fundamentals, supportive tokenomics and key emerging catalysts. STX stands out with the most compelling catalyst path in the coming months and the highest likelihood of revaluation,” the fund said.
In-depth analysis of Stacks’ prospects
North Rock Digital’s full dissertation, published on Medium, delves into the details underlying their positive view of STX. The thesis states: “Important developments have brought further attention to our original STX thesis […] Demand for Bitcoin block space has solidified, increasing demand for the product STX is building.”
Significant is the Nakamoto upgrade, scheduled before Bitcoin’s halving in April. This upgrade is seen as a pivotal moment for STX and promises dramatic improvements in speed and efficiency, including 5-second block times and support for sBTC, a secure version of wrapped Bitcoin. This development positions STX closer to a true Bitcoin L2, according to North Rock Digital.
The hedge fund also points to the broader context within the Bitcoin ecosystem that favors STX. The rising demand for Bitcoin’s block space, especially with a 50x spike in network average gas costs this year, alongside the development of Ordinals, indicates a growing interest in using Bitcoin beyond just a store of value. These developments, coupled with the expected approval of the US spot Bitcoin ETF, are expected to drive demand for STX’s offering.
Additionally, STX has been somewhat overlooked lately, which North Rock Digital sees as a unique investment opportunity. “Despite these positive developments, attention for STX has decreased […] giving us a unique opportunity,” the thesis explains. Notably, the Stacks developer team’s progress towards the Nakamoto upgrade is on track, with the Mockamoto milestone already completed.
The fund also emphasizes Stacks’ international partnerships and upcoming initiatives. These include the launch of a marketing campaign in Asia and the rollout of the second Nakamoto testnet by January. “Stacks is expanding its footprint globally… They will conduct a marketing campaign in the first quarter of ’24 to increase awareness of Bitcoin L2s, with a focus on South Korea, Singapore, Hong Kong and Dubai,” the fund explains out.
“Stacks is expanding its footprint globally… They will conduct a marketing campaign in the first quarter of ’24 to increase awareness of Bitcoin L2s, with a focus on South Korea, Singapore, Hong Kong and Dubai,” the hedge fund explained out. Furthermore, the introduction of new Bitcoin L1 tools such as BitVM is also seen as an important step towards realizing a true Bitcoin L2 vision without the need for any changes to Bitcoin L1.
STX rating
In terms of valuation, STX is currently considered undervalued, especially compared to other L1/L2 ecosystems. With the Nakamoto upgrade and the proximity of the next BTC halving, STX is expected to narrow its valuation discount to other assets, North Rock Digital claims.
After Nakamoto, STX is expected to enable a range of applications, including a high-performance BTC-denominated NFT marketplace and traditional DeFi applications. The potential for these applications, combined with STX’s strong BTC-focused community, makes a compelling case for its future growth.
At the time of writing, the STX was near its yearly high, trading at $1.15.
Featured image from Shutterstock, chart from TradingView.com