Bitcoin Runes, a novel protocol for issuing fungible tokens on the Bitcoin network, is poised to go live alongside the Bitcoin halving later this week. However, the true market opportunity for Runes may only arise several months after the initial wave of investor hype subsides, as stated by the pseudonymous decentralized finance (DeFi) researcher Ignas in an April 17 X post. According to Ignas, the floor prices of Runes could experience a significant drop because they do not immediately enhance the trading experience of BRC-20 tokens and smaller traders may be priced out due to the rising Bitcoin transaction fees.
Both Runes and BRC-20 tokens represent new fungible token standards that aim to enhance the utility of Bitcoin within the emerging Bitcoin decentralized finance (DeFi) paradigm, also known as BTCFi. The emergence of Runes has also been acknowledged by asset management giant Franklin Templeton. In an April 3 research report, the asset manager recognized the success of other Bitcoin-native fungible token standards, such as Ordinals. Notably, Bitcoin surpassed 65 million Ordinals inscriptions on April 11, less than a year and three months after its launch in January 2023.
Ignas anticipates the launch of numerous Runes in the market, leading to a dilution of trader attention and inflows into specific tokens. Coupled with the initial lack of utility surrounding Runes, these factors could equate them to memecoin trading, according to Ignas. Nonetheless, despite the bearish short-term outlook, Ignas remains optimistic about the long-term prospects of Runes.
Furthermore, Runes could have a positive impact on the development of Bitcoin layer-2 networks. Alongside Ordinal inscriptions, they have the potential to drive more activity to Bitcoin L2 networks. This is due to the escalating Bitcoin network fees, which will render smaller transactions less viable. Andre Serrano, the product and partnership manager at Stacks, stated that Bitcoin L2 network Stacks is preparing to launch a trading solution for Runes, BRC-20s, and Ordinals inscriptions.
In related news, Bybit predicts that the supply of Bitcoin on exchanges will be depleted in nine months.