Key Facts: “Runes and Ordinals are here to stay,” says Capriole Investments. The momentum in the price of bitcoin could take it above $100,000 in a few months. Runes (or «runas» in Spanish) is a new protocol that was activated in Bitcoin last Friday, along with the fourth halving, and that allows for the issuance of fungible tokens. Developed by Casey Rodarmor (the creator of the Ordinals protocol), Runes seeks to overcome the shortcomings of BRC-20 tokens. As BitcoinDynamic announced minutes after its launch, the runes invaded the network immediately causing a considerable increase in commissions to the joy of the miners and to the misfortune of those who needed to make bitcoin (BTC) transactions. The investment company, Capriole Investments, called the launch of Runes “colossal”:
«Runes captured hundreds of millions of dollars in market capitalization in days. “Bitcoin transaction fees have skyrocketed to all-time highs, making the post-halving era ironically as profitable for miners as before.” Capriole Investments, investment company.
For the aforementioned company It's hard to know how long this fervor for Rune will last.s. Will it be just a fad or will it be an ecosystem that will continue to constantly grow and adopt? Regardless, according to Capriole Investments, “if this cycle's NFT and altcoin boom on the Bitcoin network is only half of Ethereum's last cycle, this will be a major attraction of attention and capital for BTC.” In the company's words, «recent events are a clear forecast that we can expect to see much more alternative use of the Bitcoin protocol in the coming years.»
3 benefits for bitcoin
As a consequence of the launch of Runes and its acceptance by the market, Capriole Investments anticipates 3 benefits for the Bitcoin ecosystem in the short term. The first of them is that mining revenue will remain high. The company details that, in this scenario, «we may not see any measurable consolidation in the mining industry nor a measured capitulation.» On the contrary, «with the current use of these protocols, mining is highly profitable, comparable (and superior) to pre-halving levels.» The second benefit also has to do with Bitcoin miners, and that is that capitulation would be delayed until the use of runes or Ordinals tokens fades. It is worth clarifying that a phenomenon in which many miners stop operating due to lack of profitability is called «miner capitulation.» The report says that only when Runes begins to lose relevance – if this happens – will profit margins begin to reduce considerably for low-efficiency mining equipment. As a third benefit of the arrival of Runes, Capriole Investments says that “the price of bitcoin will rise.”
«With the electrical cost of bitcoin at $70,000 (the raw price of electricity to power the mining rigs that mine each BTC), we would expect the price of BTC to significantly exceed this level. However, there is no urgency for this to happen as long as the income of Runes-related miners remains so high. Miners are very profitable nowadays. However, we would expect the price to follow the baseline electricity cost and exceed it, as it has done 100% of the time in the past. Capriole Investments, investment company.
To better understand this last statement, it will be useful to read a text recently published by BitcoinDynamic under the title: «Where is the price of bitcoin going? «Its production cost gives a signal.» It details the procedure the company uses to determine both the electrical cost of bitcoin and the total production cost and why this would be related to the price of BTC.
«Runes and Ordinals are here to stay»
In conclusion, Charles Edwards, the writer of the Capriole Investments report, points out that, according to his expectation, “Runes and Ordinals are here to stay.” He substantiates his opinion by adding that “the digital art and NFT industry is here to stay,” as is “memecoin culture.” All this could attract «a new wave of young money.» Furthermore, according to this company's opinion, all of this—which implies an increase in commissions for operating in Bitcoin—will encourage the growth of the Lightning network, which is a second-layer scalability solution. Such a combination of factors, which include the use of bitcoin as a store of value, means of payment and native currency of a multipurpose network, would take its price above $100,000 in the next 12 monthsaccording to Capriole Investments.