Runes Has Gone Viral, Can it Become a New Hype Narrative After Halving?

[TL；DR]:
As Bitcoin successfully achieves its fourth halving, the popularity of Runes runes in the Bitcoin eco continues to heat up.

Whether the emergence of inions and runes with short-term wealth effects or the launch of Bitcoin-based protocols such as L2 and DeFi indicate renewed enthusiasm among investors and developers for expanding Bitcoin as an eco network.

Bitcoin has evolved over four years, with each halving being an important milestone in its development. Although the price of Bitcoin may fluctuate after halving, its long-term stable growth trend does not seem to remain unchanged.

Introduction

As Bitcoin completed its fourth production halving, the hot topic in the market is whether the halving effect has been fully reflected in prices. At the same time, people eagerly anticipate new market prosperity drivers, among which ordinal numbers and runes have become important trends that we cannot ignore.

Runes Runes Online, Active Market Trading

As Bitcoin achieved its fourth halving, the popularity of ordinal numbers and runes in the Bitcoin eco continues to heat up.

The innovative concept of ordinal numbers, first introduced by @rodarmor in January 2023, greatly promotes the development of inion technology by increasing the amount of data stored on the blockchain. The emergence of this technology has given rise to numerous innovative applications, such as BRC-20 and runes.

Nowadays, with the launch of the Runes protocol during the fourth Bitcoin halving, the trading volume of runes has shown an astonishing growth trend, faintly reminiscent of last year’s popularity of inions.

Although BRC20 once dominated the Bitcoin eco trading after the release of Ordinals, @rodarmor has always held reservations about it.

In September 2023, @rodarmor officially proposed the concept of Runes through a blog article and analyzed the various problems existing in existing protocols such as BRC20, RGB, and Taproot Assets. Especially the BRC20 token standard, due to its generation of “junk” data leading to Bitcoin network congestion, received severe criticism from Bitcoin core developers last year. We also wrote an article titled “Rethinking behind the Craze: 8 Misconceptions of In_ion Debates“ to explore this issue.

Source: @rodarmor

Nowadays, the rune craze is rising, and @rodarmor’s Runes has many advantages compared to BRC20:

Convenience of operation: Runes simplifies and efficiently deploys, mints, and transfers, reduces transaction times, and supports multi-receiver and multi-token transfers.

Developer friendliness: Runes has a more user-friendly data storage and indexing method, using the UTXO model for easy balance confirmation. In addition, Runes provides reference implementations, including functions such as indexing, browser, and wallet, reducing development complexity.

Compatibility and Scalability: Runes is compatible with the UTXO Layer 2 protocol, utilizes smart contract functionality, and supports lightweight wallet and soft fork upgrades, providing stronger scalability.

Token issuance flexibility: Runes provide more flexibility and choices regarding token name length, name clarity, issuance methods, etc., while adopting the Commit-Reveal mechanism to solve the problem of name race.

Security: Runes can effectively resist poisoning and trading attacks, improving overall security.

Source: Public information

In fact, a few hours after the launch of the Runes protocol on April 20, people spent over 3,200 BTC (approximately $205 million) on runes, and the Bitcoin block trading fee reached 20 BTC at one point, resulting in miners earning twice as much as before the halving. UniSat had a weekly active user count of 500,000 in January, and within a week of Runes launch, this indicator quickly climbed to 1 million.

So far, Gate.io has also launched some Runes tokens, such as $WANKO•MANKO•RUNES, $SATOSHI•NAKAMOTO, $MEME•ECONOMICS, etc.

Bitcoin Eco Development and Halving

Although Runes have many advantages, there are also some significant shortcomings.

Firstly, its complex issuance management rules and specific naming requirements not only increase the difficulty of user operations but may also increase the risk of users being phished.

Secondly, Casey chose to go live during the halving period of BTC and lacked the testnet, resulting in limited early access institutions and the need for eco maturity.

In addition, Rune still has compatibility issues, mainly limited to the distribution level and not fully integrated into a wider eco.

The market is also skeptical about whether Runes can provide a more friendly trading experience, with some believing that it has not significantly surpassed BRC20 and still faces similar issues.

Source: mempool.space/

Regardless of the situation, the explosive launch of Runes does demonstrate the positive sentiment of the market in participating in the Bitcoin eco. However, in the current macroeconomic and mining environment that is not conducive to the sharp rise of Bitcoin, the market urgently needs a new narrative after halving speculation and temporarily stopping.

Relying solely on rune hype in the Runes protocol is not enough to sustain miners from the crisis of halving for a long time.

Let’s first review the historical experience of halving cattle in the previous rounds. During the first two incidents of Bitcoin halving, which occurred in 2012 from 50BTC to 25BTC and in 2016 from 25BTC to 12.5BTC, technology enthusiasts in the community mainly focused on Bitcoin’s potential as electronic cash.

However, in 2020, when the third halving occurred, from 12.5 BTC to 6.25 BTC, people’s attention gradually shifted to the role of Bitcoin as a payment method, which sparked many discussions.

Now, we are in the fourth halving cycle, decreasing from 6.25 BTC to 3.125 BTC. Bitcoin and its entire industry have shown some unprecedented new changes. With the successful application of Bitcoin’s spot ETF, Bitcoin has gradually been regarded as an alternative investment asset, and the layout of traditional institutions and capital has become a new focus.

Meanwhile, whether it is the emergence of inions and runes with short-term wealth effects, or the launch of protocols such as L2 and DeFi based on Bitcoin, all indicate that investors and developers have re-ignited their enthusiasm for expanding Bitcoin as an eco network, bringing unlimited development potential and new opportunities to Bitcoin itself.

Bitcoin’s Future Outlook

Looking back at the previous halving, after the event, the price of BTC had significantly increased and repeatedly reached historical highs. This pattern also makes the current crypto market hope that BTC can create another brilliant future.

However, it should be pointed out that BTC prices will experience varying degrees of retracement after each halving, up to a maximum of 40%. Therefore, although the market is generally optimistic about the halved increase, investors must be cautious.

Source: @ChartsBtc

Regarding this halving, there is still no consensus on a bullish market view. However, overall, the majority still see long-term stable growth in Bitcoin. The halving of block rewards has reduced from 6.25 bitcoins to 3.125 bitcoins, with the most direct impact being a decrease in miner profits. This also prompts miners to reassess the underlying technology and network dynamics of cryptocurrencies, enhancing the robustness of the Bitcoin network and increasing the confidence of users and businesses.

Meanwhile, the existence of Bitcoin spot ETFs has provided sustained momentum for the rise of Bitcoin. ETF issuers in the United States are working hard to gain recognition from institutions and more retail investors than Bitcoin. When more investors realize that increasing asset allocation by 5% for cryptocurrencies is beneficial for increasing risk returns, it will trigger a larger investment frenzy.

In the Hong Kong market, Bitcoin and Ethereum spot ETFs are about to be listed and allow subion of ETF shares through physical redemption, which will provide better price discovery opportunities for traditional institutions and enhance Bitcoin’s overall liquidity.

In addition, many ecos built on Bitcoin are constantly thriving and developing. If last year’s inions opened the door to the construction of the Bitcoin eco, then compared to Runes, which has shown obvious advantages in operation, development, compatibility, issuance, and security, Runes provides a more comprehensive and efficient solution for developing the eco. The launch of other L2 and DeFi protocols will also greatly release the asset value of Bitcoin.

Overall, Bitcoin has evolved over four years, with each halving being an important milestone in its development. Although the price of Bitcoin may fluctuate after halving, its long-term stable growth trend remains unchanged. At the same time, investors should closely monitor the macro liquidity and Bitcoin eco development dynamics after halving, and seize more market opportunities.