Kaiko highlights a potential resurgence for Layer 2 (L2) solutions this year after a lackluster 2024. Their L2 index, which tracks five L2s including Stacks, Optimism, Arbitrum, Polygon, and Starknet, has exhibited a positive trend since the recent election, coinciding with an optimistic outlook in the crypto market that began in November. Despite concerns over market saturation with too many L2s, demand persists, with projections suggesting that $47 billion worth of bitcoin could be bridged to L2s by 2030. Kaiko analyst Adam McCarthy points out that sector rotation may favor L2 assets as investors look beyond Bitcoin, which dominated the market in 2024 thanks to significant institutional investments in BTC exchange-traded funds. With evolving regulatory dynamics, especially around broadening interest beyond Bitcoin, L2s are anticipated to experience considerable growth in 2025, presenting new opportunities for investors.

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