Bitcoin Runes, a new protocol for issuing fungible tokens on the Bitcoin network, is set to go live with the Bitcoin halving later this week.
Yet, the real market opportunity for Runes may only come months after the first wave of investor hype subsides, according to the pseudonymous decentralized finance (DeFi) researcher Ignas, who wrote in an April 17 X post:
“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.”
Rune floor prices could see a significant drop, mainly because they don’t immediately improve the trading experience of BRC-20 tokens and because small traders may be priced out of the increasing Bitcoin transaction fees, according to the pseudonymous researcher.
Daily inscription fees and BRC-20 hype wave. Source: Ignas
Runes and BRC-20 tokens are both new fungible token standards aiming to create more utility for Bitcoin in a new paradigm known as Bitcoin decentralized finance (DeFi), or BTCFi for short.
Asset management giant Franklin Templeton also recognized the emergence of Runes. The asset manager also noted the success of other Bitcoin-native fungible token standards, like Ordinals, in an April 3 research report:
“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.”
Bitcoin surpassed 65 million Ordinals inscriptions on April 11, less than one year and three months since the launch in January 2023.
Ignas expects hundreds of Runes to launch on the market, diluting trader attention and inflows into particular tokens.
Paired with the lack of initial utility around Runes, these aspects will make them akin to memecoin trading, according to the pseudonymous researcher, who wrote:
“Finally, utility-wise runes will trade as memecoins like BRC20s. At least at first, so the excitement of ‘new’ will fade away……
