A Case for Bitcoin Alts

Key Insights

• The Bitcoin network underwent a paradigm shift with the launch of Runes and Ordinals, leading to the creation of the first generation of alts on mainnet.
• Although Runes and Ordinals saw a significant decline in activity in the summer months, sustained activity, strong mindshare, and rising valuations seem to indicate a bottom.
• Upcoming catalysts for Bitcoin alts include strong BTC momentum, Magic Eden’s TGE, improving UX, potential CEX listings, and Chinese economic stimulus.
• Despite Bitcoin's limitations (e.g., high block times, low programmability), we believe there is asymmetric upside in the broader ecosystem heading into 2025.

Introduction

The Bitcoin network changed forever in 2023 with the introduction of Ordinal Theory. Ordinals enable arbitrary data (images, text, etc.) to be inscribed on an individual satoshi (the smallest divisible unit of Bitcoin), effectively creating tradable and entirely onchain NFTs on Bitcoin mainnet. As a follow up, Casey Rodarmor, the founder of Ordinal Theory, decided to release a fungible Bitcoin token standard called Runes in 2024, essentially replicating the functionality of the Ethereum ERC-20 token standard on the Bitcoin network. With the introduction of these new innovations, the Bitcoin L1 has evolved beyond BTC and now hosts its first ever generation of alternative tokens (alts).