How Lightning Strengthens Bitcoin Investment Thesis According to Fidelity

Fidelity tips the Lightning Network to extend the Bitcoin investment thesis beyond simply being a store of value.

In recent years, the prevailing investment thesis for Bitcoin has been its potential to become a store of value like gold, thanks to its limited supply. However, according to trillion-dollar asset manager Fidelity, the investment thesis for the asset has the potential to go beyond just being a store of value with the Lightning Network.

The Lightning Network is a peer-to-peer network that runs atop the Bitcoin chain. It allows users to conduct transactions off-chain using self-created payment channels. Through this model, users can typically escape the long wait time and high fees associated with the Layer-1 chain.

In a report released on Wednesday, February 19, Fidelity asserted that adoption of the Lightning Network could enhance Bitcoin’s long-term value proposition and investment potential, and solidify its place in the global financial system with use cases like automated payments, instantaneous interbank settlement and even real-world asset tokenization.

However, the Lightning Network is not a new technology. It has been around since 2018. Despite its promise, issues with creating payment channels and transaction failures have long posed hurdles to adoption.

But Fidelity argues that these issues are set to become things of the past.

“Lightning is steadily improving in efficiency and growth while also expanding its use cases beyond simple one-to-one payments. Its network capacity and transaction volume have continued to increase as Lightning continues to scale,” the asset manager wrote.

Indeed, Fidelity notes that the Lightning Network is moving from having numerous small, less efficient channels to having fewer better-capitalized channels, improving the odds of transaction success. Specifically, the asset manager noted that the average channel per node has dropped 30%, while the average capacity per node has grown 118%.

At the same time, the known total capacity of the Lightning Network, excluding private channels, has grown 384% since 2020 to stand at about 5,358.50 BTC as of January 2025, worth nearly $520 million at the time of writing.

Meanwhile, users now appear to be gravitating toward node service providers to enjoy better channel management for more efficient costs and reliable experiences.

Amid all these, Fidelity suggests that the Lightning Network may already be on a path to increased adoption. 

“More businesses integrated the Lightning Network in 2024 than years past-a trend we expect to continue throughout 2025,” the asset manager wrote, citing integration from firms like Coinbase.

Platforms like Nostr and Podcast 2.0 are also leveraging the network for payments. The asset manager expects institutions to jump in as the network’s efficiency improves due to the appeal of leveraging the security of the Bitcoin network.