A new method called Bitcoin Runes is about to be launched for creating interchangeable digital tokens using the Bitcoin blockchain. This event is scheduled to occur simultaneous with the Bitcoin halving, which is anticipated to take place later in the week.
However, Ignas, a pseudonymous researcher in the decentralized finance (DeFi) field, believes that the true market potential for Runes might not fully materialize until several months after the initial excitement from investors has waned, as expressed in a post on April 17.
“Runestone, RSIC, and PUPS are already pumping, promising holders shiny new Rune token airdrops. And FOMO threads keep coming. But, like the NFT frenzy post-JPEG reveal, the market could soon cool off.”
The cost of using Rune for setting floor prices in the BRC-20 token market might decrease substantially. This is likely due to two reasons: first, Rune doesn’t enhance the trading experience for these tokens in a noticeable way. Second, escalating Bitcoin transaction fees could make it unaffordable for smaller traders to participate. (Source: anonymous researcher)
Rune and BRC-20 tokens represent two innovative fungible token frameworks designed to expand Bitcoin‘s functionality within the emerging field of Bitcoin Decentralized Finance, also referred to as BTCFi.
Franklin Templeton, a prominent player in asset management, has taken notice of the emergence of Runes. In their April 3 research report, they acknowledged the achievement of Bitcoin’s other successful fungible token standards, such as Ordinals.
“Bitcoin Ordinals have seen a surge in trading volume over the past several months. This is reflected in an increase in dominance starting in December of 2023 when it surpassed ETH in trading volume.”
On April 11, 2024, Bitcoin reached over 65 million inscriptions of Ordinal data, a milestone achieved just under a year and three months following its introduction in January 2023.
A Defi researcher named Ignas anticipates that around 200-300 new Runes may enter the market. This could potentially lead to traders’ focus being spread thin and decreased investments into specific tokens.
In the beginning, Runes had little practical value, as noted by an anonymous researcher. As a result, their characteristics resemble the volatile trading of meme coins.
“Finally, utility-wise runes will trade as memecoins like BRC20s. At least at first, so the excitement of ‘new’ will fade away. Especially if no rune token manages to sustain the pump and degens lose money.”
Despite the bearish short-term outlook, Ignas noted that he is bullish on Runes in the long term:
“If I’m right the real opportunity comes after the hype cools down post the Rune protocol launch.”
Bitcoin Runes will drive more activity to BTC layer-2s
Rune scripts may bring about a favorable impact on the growth of Bitcoin’s layer-2 (L2) networks. In conjunction with Ordinal inscriptions, they could attract more engagement to these networks, given that escalating fees on the primary Bitcoin network might deter smaller transactions, as explained by Andre Serrano, the product and partnership manager at Stacks, during an interview with CryptoMoon.
“There’s going to be a lot of asset issuance on [Bitcoin] L1, which will drive up the transaction fees… This prices out a lot of users and activity… Ultimately, pushing more of this activity to L2s will become a necessity.”
Stacks, the Bitcoin L2 (Layer 2) network, is planning to introduce a trading platform for Runes, BRC-20 tokens, and Ordinal inscriptions soon.
Related: Bitcoin supply to run out on exchanges in 9 months — Bybit
Read More
- LDO PREDICTION. LDO cryptocurrency
- JASMY PREDICTION. JASMY cryptocurrency
- Chainlink to $20, when? Why analysts are positive about LINK’s future
- Citi analysts upgrade Coinbase stock to ‘BUY’ after +30% rally projection
- Ethena rallies 45% in two weeks, but bulls still have an uphill battle
- Why iShares’ Bitcoin Trust stock surged 13% in 5 days, and what’s ahead
- Why Bitcoin could reach $71K in September, and $100K in December
- Spot Solana ETF approvals – Closer than you think?
- Orca crypto price prediction: Buying opportunity ahead, or bull trap?
- Can Ethereum ETFs outperform Bitcoin ETFs – Yes or No?
2024-04-17 15:29