In the lead-up to the Bitcoin halving, the two largest BRC-20 tokens underwent significant declines of over 40% on the weekly chart. Ordinals (ORDI) and Sats (SATS), the top BRC-20 tokens by market capitalization, experienced notable drops. ORDI witnessed a decrease of over 42%, while SATS faced a decline exceeding 45% over the week.

Sales of BRC-20 tokens have also been on a downward trend. PUPS BRC-20 sales plummeted by 30% in the past 24 hours to $1.4 million, and WZRD BRC-20 sales dropped by 63% to $1.1 million, according to data from NFT aggregator CryptoSlam. Conversely, the daily sales volume of RUNE BRC-20 tokens surged by over 4,500% to $251,000, indicating a shift in trader focus towards Bitcoin Runes.

Over the previous week, PUPS BRC-20 and WZRD BRC-20 tokens ranked as the second and third-largest collections by sales volume across all blockchains, respectively. PUPS accumulated over $41 billion in sales volume, while WZRD amassed $16.3 million in weekly sales, as reported by CryptoSlam.

The sudden interest in Bitcoin Runes, a novel protocol facilitating the issuance of fungible tokens on the Bitcoin network, can be attributed to its imminent launch, scheduled to coincide with the Bitcoin halving later this week. However, despite the burgeoning interest, the genuine market potential for Runes may only emerge months after the initial wave of investor excitement subsides.

According to a decentralized finance (DeFi) researcher known as Ignas, the surge in interest may be short-lived, similar to the post-JPEG frenzy in the non-fungible token (NFT) space. Ignas highlighted the potential for a cooling off period in the market, stating, "Runestone, RSIC, and PUPS are already pumping, promising holders shiny new Rune token airdrops. And FOMO threads keep coming. But, like the NFT frenzy post-JPEG reveal, the market could soon cool off."

Concerns arise regarding Rune prices following the Bitcoin halving, with predictions of a significant decline. This anticipation stems from the fact that Runes do not immediately enhance the trading experience of BRC-20 tokens and the likelihood that small traders may be priced out due to increasing Bitcoin transaction fees.

Ignas foresees the potential launch of hundreds of Runes on the market, leading to dilution of trader attention and capital inflows. Coupled with the initial lack of utility around Runes, this could result in memecoin-like trading behavior, according to Ignas. He remarked, "Finally, utility-wise runes will trade as memecoins like BRC-20s. At least at first, so the excitement of ‘new’ will fade away. Especially if no rune token manages to sustain the pump and degens lose money."

However, Ignas remains optimistic about the long-term prospects of Runes, anticipating gradual enhancements in functionality. The integration of Runes with the Internet Computer Protocol (ICP) is a notable development, enabling ICP smart contracts to directly interact with Runes and BRC-20 tokens on Bitcoin’s base layer, unlocking additional possibilities for holders.

ICP's endeavors are part of a burgeoning paradigm known as Bitcoin decentralized finance (BTCFi), aimed at fostering greater utility around BTC and Bitcoin-native assets. Through initiatives like these, the ecosystem seeks to evolve and adapt to meet the changing demands of the market.