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- Wrapped Bitcoin (wBTC) experienced a drastic flash crash on Binance, dropping to $5,200 before recovering.
- Neither BitGo nor the WBTC team has commented on the flash crash. A technical glitch is believed to be the cause.
- The price drop occurred only on Binance. Notably, wBTC is back at the pre-crash price level.
On November 23rd, Wrapped BTC price experienced a dramatic price drop on Binance, crashing to an all-time low of approximately $5,200 in a ‘flash crash’. Interestingly, this sudden dip was not mirrored on other exchanges, sparking concern among holders.
Although the price of bitcoin’s wrapped version plummeted sharply, the asset rebounded fairly quickly. Moreover, the swift rebound presented an unusual opportunity for fortunate buyers to acquire Wrapped Bitcoin at a 95% discount. The situation was something that seemed nearly impossible to predict.
The cause of this abrupt drop remains unclear, with some speculating liquidity issues or a technical glitch, which is often behind such flash crashes.
Wrapped BTC price began the day trading normally around $98K before plummeting, allegedly due to a technical glitch. Subsequently, the price recovered quickly. By the end of the day, the Binance chart closed near $97K, the price is now back to the previous levels.
Continue reading for more insights.
WBTC’s Price Drops Sharply, Days After Coinbase Delisting Announcement
The reason behind the sudden drop in Wrapped BTC price remains unclear. Neither the BitGo team, nor the WBTC team have provided official comments on the flash crash. This incident occurred just days after Coinbase announced its decision to delist WBTC on November 19th. Coinbase will delist wBTC on December 19, 2024, at 12 PM Eastern Time.
In the announcement, Coinbase assured users that their WBTC holdings would remain accessible for withdrawal. The exchange cited liquidity concerns as the reason for delisting.
BiT Global, the custodian for WBTC, accused Coinbase of strategically delisting Wrapped Bitcoin to benefit its own tokenized Bitcoin offering, cbBTC. The company suggested that Coinbase’s move was an attempt to boost cbBTC’s market position by eliminating competition from WBTC. WBTC is known as the current leading wrapped Bitcoin product.
Justin Sun’s Involvement Led to the Creation of Multiple Competing Tokens
Wrapped Bitcoin (WBTC) is nearing a market capitalization of $14 Billion, showing steady growth. Nevertheless, Coinbase’s alleged move to promote cbBTC has added another layer of complexity to its relationship with WBTC’s custodial partner, Justin Sun.
Sun became involved with WBTC following a partnership between BitGo and his companies. In August, BitGo formed a joint venture with BiTGlobal. BiTGlobal, a Hong Kong-based trust is associated with Sun.
Various wrapped Bitcoin products have been launched since the creation of WBTC, creating a niche, competitive market. These include cbBTC, launched by Coinbase, and kBTC, introduced by crypto exchange Kraken.
Sun has openly criticized Coinbase for not completing a proof-of-reserves process for cbBTC, fueling tensions in the wrapped Bitcoin space.
#cbbtc lacks Proof of Reserve, no audits, and can freeze anyone's balance anytime. Essentially, it’s just 'trust me.' Any U.S. government subpoena could seize all your BTC. There’s no better representation of central bank Bitcoin than this. It’s a dark day for BTC.
— H.E. Justin Sun (@justinsuntron) September 12, 2024
As the BTC derivatives token market develops, competition intensifies between emerging derivatives and well-established players like WBTC.
Bitcoin Price Status
As of writing, the BTC price was at $97,632.23, steadily making its way to the $100k markAlthough it has seen a slight dip of 0.33% in the past 24 hours, it remains well above current price levels. Bitcoin’s trading volume for the past 24 hours is substantial, at $68.4 Billion.
Bitcoin’s overall market cap remains strong at $1.95 Trillion, down by 0.30%, while its fully diluted valuation (FDV) stands at $2.07 Trillion. These figures highlight Bitcoin’s growing dominance and the continued confidence investors have in the cryptocurrency. However, short-term fluctuations suggest a period of consolidation may be on the horizon.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
