What prompted Binance to abandon Ordinals, and can the market endure the consequences?
Binance’s NFT marketplace didn’t attract much attention from traders, who are now more interested in Runes instead.
In April, Binance surprised Bitcoin enthusiasts by discontinuing support for Ordinals. The exchange, which has been facing legal challenges, claimed that this move was aimed at streamlining its product offerings. Binance advised users to transfer their Bitcoin NFTs to another platform to remain eligible for airdrops.
This decision was unexpected considering that Binance is the largest cryptocurrency platform in terms of trading volume. Ordinals were only made possible last year and allow inscriptions on a single satoshi, equivalent to one 100-millionth of a Bitcoin. This feature enables the attachment of images, videos, and other data to sats. However, critics argue that this only congests the Bitcoin blockchain.
Binance’s head of product, Mayur Kamat, previously expressed support for Ordinals. So why did the company make such a dramatic reversal, and how will this impact the future of Ordinals?
Since Binance ended support for Ordinals on April 18, data from CryptoSlam! shows a significant decline in sales volumes, as well as the number of unique buyers and sellers. On April 19, sales volumes amounted to $28.2 million, with 9,469 unique buyers and 9,728 unique sellers. However, by April 26, revenues had dropped to $11.4 million, and the number of buyers and sellers had more than halved.
It’s important to note that correlation doesn’t imply causation, and other factors are at play. April 19 also marked the latest Bitcoin halving, which reduced block rewards from 6.25 to 3.125 BTC. Traders were focused on this event. Additionally, the launch of Runes, a new standard that allows for more efficient rollouts of fungible tokens on Bitcoin, coincided with the halving. Data from Dune Analytics shows that Ordinals’ share of transactions on the Bitcoin blockchain dropped from 6.5% on April 19 to 0.4% the next day, as demand for memecoins surged.
Binance isn’t solely responsible for the decreased demand for Ordinals; Runes are also impacting their popularity. Binance exiting the market is unlikely to bother Ordinals collectors, especially considering the exchange’s restricted presence in 20 countries. On April 29, OKX and Magic Eden accounted for 94% of Ordinals transactions, indicating that Binance’s NFT platform wasn’t a preferred choice for Ordinals traders.
This suggests that Binance is focusing its resources on areas where it can gain a larger market share. The question now is whether Binance will introduce support for Runes in the future. With trading volumes increasing for newly launched memecoins on the Bitcoin network, it’s inevitable that Binance will want to participate.
While demand for Ordinals has declined recently, Bitcoin remains the second-largest blockchain for NFT sales volume, surpassing Solana and with Ethereum reclaiming the top spot. If the appetite for Bitcoin NFTs rebounds, Binance’s decision to withdraw Ordinals from its marketplace may prove shortsighted.
In other news, Binance’s CEO, CZ, is in discussions with Sam Altman regarding potential AI investments.
