As the Bitcoin network approaches its next halving event, the Bitcoin Runes protocol, designed for issuing fungible tokens, is set to launch.
Despite the initial excitement, which has boosted prices for related tokens like Runestone, RSIC, and PUPS due to anticipated Rune token airdrops and fear of missing out, decentralized finance (DeFi) researcher Ignas suggests that Runes' true market potential will emerge once the hype subsides and prices stabilize.
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Ignas explained that the market might experience a downturn soon due to several factors. Firstly, high Bitcoin transaction fees could deter smaller traders, leading to their potential withdrawal from the market.
Additionally, the introduction of Runes is unlikely to drastically change the trading dynamics of BRC-20 tokens immediately, as their trading mechanisms are similar to those of non-fungible tokens (NFTs).
Runes and BRC-20 are both token standards aiming to add more functionality to Bitcoin's DeFi ecosystem (BTCFi).
Ignas further explains that the market will soon be flooded with various Rune tokens. This influx will spread trader focus and financial investments thinly across many tokens, potentially diluting their value.
Initially, he expects Runes to function similarly to memecoins, whose utility and trading are based more on speculation than fundamental value. This could lead to a quick decline in excitement as the novelty wears off, particularly if none of the Rune tokens can maintain their initial price boosts.
However, the researcher remains bullish on Runes long-term:
If I'm right, the real opportunity comes after the hype cools down post the Rune protocol launch.
Therefore, while the short-term potential of Runes may be underwhelming, its true value and utility will likely be realized once the initial buzz diminishes and the market stabilizes.
In other related news, April 11 marked a milestone for Ordinals, the NFTs on the Bitcoin blockchain, as they exceeded 65 million inscriptions.
