Bitcoin Runes, a novel protocol for issuing fungible tokens on the Bitcoin network, is scheduled to go live during the upcoming Bitcoin halving event. However, the true market potential for Runes may not be fully realized until several months after the initial investor frenzy subsides, according to Ignas, a pseudonymous researcher specializing in decentralized finance (DeFi). In an X post on April 17, Ignas argued that the floor prices of Runes could experience a significant decline. This is primarily due to the fact that they do not immediately enhance the trading experience of BRC-20 tokens, and because smaller traders may be unable to afford the rising Bitcoin transaction fees.
Both Runes and BRC-20 tokens are recently developed fungible token standards that aim to increase the utility of Bitcoin within the new DeFi paradigm known as Bitcoin decentralized finance (BTCFi). This emergence has not gone unnoticed by Franklin Templeton, a prominent asset management firm. In an April 3 research report, the company acknowledged the rise of Runes and the success of other Bitcoin-native fungible token standards like Ordinals. On April 11, Bitcoin surpassed 65 million Ordinals inscriptions, just over a year and three months since its launch in January 2023.
Ignas predicts that hundreds of Runes will flood the market, leading to a dilution of trader attention and investment flow into specific tokens. Combined with the initial lack of utility surrounding Runes, this could potentially equate them to meme coin trading, according to the anonymous researcher. However, despite the short-term bearish outlook, Ignas remains optimistic about the long-term prospects of Runes.
In addition, Runes could have a positive impact on the development of Bitcoin layer-2 (L2) networks. Alongside Ordinal inscriptions, Runes could drive increased activity to Bitcoin L2 networks as rising network fees make smaller transactions less feasible. Andre Serrano, the product and partnership manager at Stacks, stated that Stacks, a Bitcoin L2 network, is preparing to launch a trading solution for Runes, BRC-20s, and Ordinals inscriptions.
Furthermore, Bybit predicts that Bitcoin supply on exchanges will run out within nine months.