Get ready for the arrival of a new digital commodity protocol, Runes Protocol, deeply rooted in Bitcoin, set to make waves in the cryptocurrency scene. Created by Casey Rodamor, this protocol has sparked considerable excitement within the crypto community.
Nevertheless, DeFi researcher and market expert DeFi Ignas advises investors to approach with caution and weigh various bearish factors before giving in to the fear of missing out (FOMO) as the protocol gears up for its launch on Friday.
DeFi Ignas Cautions About Runes Protocol Launch
In a recent social media post on X (formerly Twitter), DeFi Ignas outlines several reasons for caution regarding the upcoming launch of the Runes Protocol.
The researcher highlights the current excitement in the pre-rune token market, with tokens like Runestone, RSIC, and PUPS experiencing price surges and promising airdrops of the new Rune token to their holders.
DeFi Ignas draws parallels between the current market fervor and the previous non-fungible token (NFT) frenzy, cautioning that such enthusiasm may diminish soon. Additionally, the researcher points out that increasing Bitcoin transaction fees could pose challenges for small traders, potentially leading to disillusionment.
DeFi Ignas suggests 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 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), which is mintable for free over four years but limited to just one mint per transaction, suggesting that it may not be a straightforward investment opportunity.
DeFi Ignas’s Outlook on Runes Protocol Utility
DeFi Ignas predicts that Rune tokens will initially trade as meme coins, similar to BRC20 tokens. However, the researcher warns that the initial excitement surrounding their novelty may fade, especially if no Rune token manages to sustain its price surge and investors incur losses.
Despite short-term uncertainties, the researcher remains optimistic about the long-term prospects for the Runes Protocol. DeFi Ignas anticipates that genuine opportunities may emerge 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 often driven by hype 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, while 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. DeFi Ignas identifies the current fourth wave represented by the Runes Protocol, which the researcher believes will endure, spawning multiple waves in the future.
Daily chart BTC’s price trending downward over the past week. Source: BTCUSD on TradingView.com
Despite short-term bearish factors, DeFi Ignas believes the Runes Protocol holds significant long-term potential. As the protocol launches, market participants are advised to evaluate its impact beyond initial hype, considering the technical advancements and unification it aims to bring to the Bitcoin DeFi industry.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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