Invisible Lightning: Why trading channels are destroying popular Bitcoin indicators

The Bitcoin Lightning Network was once the crown jewel of Bitcoin’s scaling story, a living map of open channels and growing liquidity that reflected real-time adoption.

However, as the network matured, the situation became murky. Behind the steady decline in Bitcoin Lightning’s public capacity is a quiet change. Exchanges, wallets, and merchants are routing more payments than ever through private custodial paths that are invisible to charts.

The metrics we’ve relied on for years to measure Lightning’s health may now be telling the wrong story.

Currently, public lightning capacity is approximately 4,132 BTC. The number of nodes is 16,294, the number of channels is 41,118, the average fee rate is 794 ppm, and the average base fee is 947 mSat.

Although the chart is still below 2024 levels, payments are being consolidated on exchange routes, private channels, and stablecoin pilots that are not registered in a public capacity.

The August local low of around 3,600 BTC provides a clear baseline to track the rebound. This trajectory is consistent with the well-documented gap between collateral posted on public channels and payments moving through exchange custodial edges, private links, and multipath routing.

The gap will widen as larger exchanges drive more withdrawals and deposits than Lightning and wallets resize liquidity without opening new public channels. our Explanation of recent capacity trends highlights key points This is to view the decline in public indicators as consolidation rather than a decline in public interest.

Currently, exchanges are responsible for a significant portion of the actual throughput.

Coinbase is offering Lightning live for its customers. OKX supports Lightning deposits and withdrawals with documented limitations. Kraken introduced Lightning in April 2022. Binance completed the integration in July 2023. If these exchanges route the majority of their flows through Lightning, they can settle more payments through fewer public channels, potentially compressing their measured processing power even as their utility per BTC increases.

Seller and processor data points fill out the demand side. CoinGate reports that the proportion of BTC merchant payments routed through Lightning nearly doubled from 2023 to early 2024, reaching the mid-teens, and this trend continued through 2025.

Japan’s Mercari is rolling out BTC payments through its marketplace app that allows sellers to pay in yen. South Africa’s Pick’n Pay has completed a nationwide Lightning rollout through its partners. Breez and 1A1z’s 2025 report claims that more than 650 million people have “access” to Bitcoin payments across Lightning-enabled apps and exchanges, indicating the total number of users that can be reached even with low active usage.

The next leg will focus on stablecoins.

Tether announced on January 30th that USDt will come to Bitcoin via Lightning using Taproot assets, opening a dollar-denominated corridor on the Lightning Rail. Lightning Labs is positioning this tool as an avenue for stablecoin issuers and payment processors to route the flow of dollars in Lightning payments.

As large exchanges and processors add USDt along with BTC on Lightning, the size and volume of transactions could increase without a proportional increase in exposed channel collateral, further weakening its ability to be a proxy for activity.

Wallet and protocol upgrades account for the transition from more roots to better roots. Splicing allows wallets to resize existing channels rather than opening new channels, reducing visible channel churn while improving liquidity placement.

Dual funding improves the allocation of initial balances at channel opening and reduces oversupply. BOLT12 provides reusable payment requests with recipient privacy and smooth recurring flow.

These changes incentivize network operators to employ fewer channels with higher throughput per route, resulting in a configuration that allows them to reduce public capacity without compromising payment success rates.

A concise snapshot of the latest network statistics helps clarify the current tense of the story.

Security and policy remain variables for operators and liquidity providers. Post-mortem analysis of exchange cycles and channel disturbances shows that mitigation occurs continuously without loss to the entire network.

Regulatory carve-outs can be regional, as we saw when Kraken suspended Lightning in Germany in 2024 while maintaining global support. These factors can affect the incentives of node operators, which in turn affects the amount of liquidity posted to public channels versus private or custodial routes.

Scenario planning helps you set expectations for next year without relying solely on capacity.

In the base case, the public capacity will be in the 3,500-4,800 BTC range, with high dollar throughput as the majority of the exchange’s withdrawals will be done via Lightning and the USDt pilot will come online.

The upward trend driven by the USDt corridor and broader processor support will drive capacity up to 4,500-6,500 BTC, even as more traffic is privatized, while exchange-routed withdrawal rates will reach the high teens to mid-20s.

On the downside, there are persistent fee pressures and regional policy frictions, with capacity approaching 3,000 BTC, and slow merchant adoption outside of crypto-native industries. These paths depend on wallet UX upgrades, exchange connectivity, fee terms, and the pace of Taproot Assets integration.

The working framework for the second half of 2025 is clear.

Public capacity is an imperfect metric that lags because throughput is concentrated on a small number of more capable routes and custodial edges that are not advertised.

Exchange integration sets up transport, wallet upgrades improve liquidity, and USDt via Lightning opens the dollar corridor.

The latest capacity of 4,132 BTC sets the starting line for tracking whether the utility per BTC of visible capacity continues to rise.