The cryptocurrency landscape is about to witness the emergence of a new Bitcoin-native digital commodity protocol that is expected to leave a lasting impact. Developed by Casey Rodamor, the Runes Protocol generates significant anticipation within the crypto community.
However, DeFi researcher and market expert DeFi Ignas cautions investors to consider several bearish factors before succumbing to the fear of missing out (FOMO) as the protocol prepares for its launch on Friday.
Rising BTC Transaction Fees And NFT-Like Trading Mechanisms
In a recent social media post on X (formerly Twitter), DeFi Ignas points out several reasons to be cautious for the time being.
The researcher highlights the current enthusiasm surrounding the pre-rune token market. Tokens like Runestone, RSIC, and PUPS are already experiencing price surges and promising airdrops of the new Rune token to their holders.
However, DeFi Ignas compares this market fervor to the non-fungible token (NFT) frenzy, cautioning that such excitement may cool off soon. Additionally, the researcher suggests that increasing Bitcoin transaction fees could pose challenges for small traders, potentially leading to disillusionment.
DeFi Ignas further notes that the Runes Protocol may not initially revolutionize the trading experience for BRC20 tokens, as the underlying trading mechanisms and user interfaces resemble those of NFTs.
The researcher expresses skepticism about the Rune Protocol’s ability to offer superior swap mechanisms compared to BRC20 tokens. Furthermore, the impending influx of numerous Rune tokens hitting the market could dilute trader attention and decrease money inflows per token.
DeFi Ignas highlights the unique nature of Rune 0 (UNCOMMON•GOODS), mintable for free over four years but limited to just one mint per transaction, suggesting that it may not be a straightforward investment opportunity.
Runes Protocol Set To Transcend Memecoin Status?
Regarding utility, DeFi Ignas predicts that Rune tokens will initially trade as meme coins, similar to BRC20 tokens. The initial excitement surrounding their novelty may fade, particularly if no Rune token manages to sustain its price surge and investors incur losses.
Nonetheless, the researcher remains optimistic about the long-term prospects for the Runes Protocol, anticipating that true opportunities may arise once the initial hype cools down following the protocol’s launch.
DeFi Ignas explains that speculative narratives tend to emerge in waves, with the first wave driven by hype, often stemming from technological innovation or meme potential.
Drawing parallels with previous examples like Friend tech, ERC404, and Telegram bots, the researcher suggests that meme tokens often experience short-lived success. At the same time, narratives rooted in technical advances have a higher chance of post-hype sustainability.
The Ordinals protocol, introduced in December 2022 by Casey Rodamor, sparked the first wave, followed by subsequent surges in late 2023. The current fourth wave is represented by Runes Protocol, which DeFi Ignas believes will endure, spawning multiple waves in the future.
Ultimately, while short-term bearish factors warrant caution, the expert believes the Runes Protocol holds significant long-term potential. As the protocol launches, market participants are advised to assess its impact beyond initial hype, considering the technical advancements and unification it aims to bring to the Bitcoin DeFi industry.
Bitcoin is trading at $62,200, down a slight 0.6% in the past 24 hours.
Featured image from Shutterstock, chart from TradingView.com