Wrapped Bitcoin supply drops to negative after 11,500 wBTC burn linked to Celsius

The proviso of wrapped Bitcoin (wBTC) dropped to its lowest since May 2021 aft the second-largest single-day pain connected Feb. 27. 

A full of 11,500 WBTC worthy astir $260 cardinal linked to now-bankrupt crypto lender Celsius was burned, turning its maturation complaint to negative. The existent full proviso of the wrapped token is 164,396 WBTC, with a monthly maturation complaint of -7.39.

wBTC Daily mint and burn. Source: Dune

WBTC is an Ethereum-based ERC-20 token that mirrors the worth of Bitcoin and is pegged 1:1 with the Bitcoin (BTC) price. Bitgo co-developed wBTC successful 2019 alongside blockchain interoperability protocol Ren and multi-chain liquidity level Kyber. wBTC is besides managed by the decentralized autonomous enactment wBTC DAO, which comprises implicit 30 members.

When a merchant wants to speech BTC for wBTC, they commencement a pain transaction and alert the custodians. The custodians past nonstop the matching magnitude of BTC to the merchant's bitcoin address. Users tin past speech their wBTC for BTC astatine merchants, who pain the received tokens.

Being an ERC-20 token makes the transportation of wBTC faster than mean Bitcoin, but the cardinal vantage of wBTC is its integration into the satellite of Ethereum wallets, decentralized apps and astute contracts.

During the highest of the bull run, wrapped tokens became a fashionable instrumentality of usage successful the DeFi ecosystem. wBTC's proviso peaked astatine 285,000 successful April 2022 erstwhile the BTC terms was trading supra $48,000.

However, with the advent of the carnivore marketplace and galore crypto contagions, the request started to slice away. The archetypal signs of lowering request came aft the Terra-LUNA-led crypto contagion that forced respective crypto lenders to redeem their wBTC. According to 1 report, Celsius Network redeemed astir 9,000 wBTC amid a increasing withdrawal demand.

Related: Celsius Network coin study shows a equilibrium spread of $2.85 billion

A akin script occurred successful November 2022 aft the FTX collapse, wherever reports bespeak the now-bankrupt crypto speech tried redeeming 3,000 wBTC close earlier filing for bankruptcy. After the FTX's illness successful November, wBTC experienced its largest monthly coin redemption, with implicit 28,000 wBTC redeemed backmost to the archetypal coin.

The marketplace contagion caused by the FTX illness besides depegged wBTC from the archetypal worth of BTC. Although the slippage was conscionable astir 1.5%, it raised superior concerns astatine the clip astir whether specified synthetic tokens is simply a viable mode of worth transfer.