The emergent Bitcoin NFT ecosystem—practically non-existent just months ago—could balloon to $4.5 billion in market size by 2025, according to a report released Friday by Galaxy Research

Analysts anticipate that the Bitcoin Ordinal frenzy of the last two months is no blip. They project demand for the ability to store NFTs on the world’s oldest and most established blockchain will only grow in the coming years. Galaxy researchers say that even by summer of this year an entire infrastructure of products and services designed to cater to this growing market will be fully developed. 

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In just two months, wallets have already begun to offer the necessary support to improve user experience and marketplaces are already emerging,” the report said. 

In late January, a project called Ordinals launched NFT-like capability on Bitcoin, allowing users to inscribe satoshis—the smallest unit of Bitcoin, representing 0.00000001 BTC—with unique data such as images and video. While that inscription process can be time intensive, and the process of putting those assets on the Bitcoin chain is costly, the project became an immediate success. 

The number of Bitcoin Ordinal inscriptions made since the end of January surpassed 200,000 earlier this week; as of this writing, over 267,000 have been made, according to public blockchain data aggregated on Dune Analytics.

Yuga Labs, the $4 billion company behind dominant Ethereum NFT collection Bored Ape Yacht Club, announced on Monday its first-ever Bitcoin-based NFT project, signaling the spread of Ordinals’ appeal to the top echelons of the established, predominantly Ethereum-based NFT ecosystem. 

“Yuga’s involvement [in Bitcoin NFTs] will push other artists to inscribe, which in turn will likely bring the major NFT marketplaces like OpenSea,” Friday’s report concluded.

The Bitcoin NFT market will likely look distinct from competitors though, due to the cost of inscribing on the network. For example, to inscribe 10,000 Bored Ape Yacht Club NFTs on the Bitcoin network would cost roughly $229,000 by Galaxy’s estimations. 

Creators will likely wish to avoid such eyebrow-raising costs; Yuga’s debut Bitcoin collection, TwelveFold, for example, is a limited series of just 300 artworks. For that reason, Galaxy predicts that Bitcoin will become the home of much rarer, “high quality” art projects, and valuable one-of-ones, while other chains like Ethereum will continue to host massive, multi-thousand piece PFP collections at much lower costs to creators. 

Galaxy’s rosy outlook for Bitcoin NFTs, though, is contingent on the continued success of the broader NFT market. 

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If the NFT ecosystem broadly does not continue to grow, then demand for Bitcoin-native NFTs will be limited,” analysts wrote Friday.

The market has struggled to recover to the all-time highs of early 2022, just before Terra’s collapse triggered the current crypto winter and cratered NFT prices and demand. NFT sales just notched their best month since the bear market kicked off. But that surge in trading volume is largely coming from controversial trading practices on the emergent Blur NFT marketplace, which encourages users to engage in high-volume trades in exchange for valuable loyalty rewards

Blur’s sudden rise, overtaking the once-dominant OpenSea, has spurred a crisis in the established NFT market. Creator royalties, once the cornerstone of NFTs’ value proposition, have been slashed by NFT marketplaces in a race to attract customers from competitors. Royalties, typically set between 5% and 10% of a sale price and paid by the seller, are how most NFT projects generate revenue. Nearly all NFT marketplaces have now made paying such fees optional, which is attractive for traders since they now pocket greater profits on each sale, but devastating for creators who lack other sources of revenue.

Those hopeful that a major new NFT market like Bitcoin could change that paradigm may not be in luck. Bitcoin doesn’t yet meaningfully support smart contracts, meaning there’s no way for emergent Bitcoin NFT marketplaces to enforce creator royalties, or to blocklist rivals who fail to honor them.

The broader trend in the NFT ecosystem is a race to zero on royalties, or complete non-enforcement, and nothing about inscriptions is likely to alter that course,” Galaxy’s report said. 

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