The cryptocurrency landscape is about to witness the emergence of a new digital commodity protocol native to bitcoin 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 DeFi market expert Ignas warns investors to consider several bearish factors before succumbing to fear of missing out (FOMO) as the protocol prepares for its launch on Friday.
Increased btc transaction fees and nft-like trading mechanisms
In a recent social network x.com/DefiIgnas/status/1780547832287789556″ target=”_blank” rel=”noopener nofollow”>mail On x (formerly twitter), DeFi Ignas points out several reasons to be cautious for the time being.
The researcher highlights the current excitement surrounding the pre-rune token market. Tokens like Runestone, RSIC, and PUPS are already seeing price increases and promising launches of the new rune token to their holders.
However, DeFi Ignas compares this market fervor to the non-fungible token (nft) frenzy, warning that that enthusiasm may soon cool. Additionally, the researcher suggests that rising bitcoin transaction fees could pose challenges for small merchants, potentially leading to disillusionment.
DeFi Ignas further notes that the Runes Protocol may not initially revolutionize the trading experience for BRC20 tokensas the underlying trading mechanisms and user interfaces resemble those of nfts.
The researcher expresses skepticism about the Rune Protocol's ability to offer superior exchange mechanisms compared to BRC20 tokens. Furthermore, the imminent influx of numerous Rune tokens hitting the market could dilute traders' attention and decrease loads of money per token.
DeFi Ignas highlights the unique nature of Rune 0 (UNCOMMON•GOODS), which can be minted for free for four years but is limited to a single mintage per transaction, suggesting it may not be a straightforward investment opportunity.
Is Runes Protocol Ready to Transcend Memecoin Status?
As for utility, DeFi Ignas predicts that Rune tokens will initially be traded as meme coins, similar to BRC20 tokens. The initial enthusiasm around its novelty may fade, especially if no Rune token manages to sustain its price increase and investors incur losses.
However, the researcher remains optimistic about the long-term prospects for the Runes Protocol, anticipating that real opportunities may arise once the initial hype after the protocol's launch cools down.
DeFi Ignas explains that speculative narratives They tend to emerge in waves, with the first being driven by advertising, often stemming from technological innovation or the potential of memes.
Drawing parallels with previous examples such as 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 they have a higher probability of sustainability after the hype.
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 the Runes Protocol, which DeFi Ignas believes will endure and generate multiple waves in the future.
Ultimately, while short-term bearish factors warrant caution, the expert believes that the Runes Protocol has significant long-term potential. As the protocol launches, market participants are advised to evaluate its impact beyond initial expectations, considering the technical advancements and unification it aims to bring to the bitcoin DeFi industry.
bitcoin is trading at $62,200, a slight drop of 0.6% in the last 24 hours.
Featured image from Shutterstock, chart from TradingView.com
