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The term "wBTC" refers to Bitcoin that has been changed for use within the Ethereum network. One wBTC is always equal to one Bitcoin since wrapped Bitcoin is an Ethereum currency backed one-to-one by Bitcoin.
The purpose of the 2019 launch of Wrapped Bitcoin was to provide investors with the opportunity to utilize its value in decentralized finance systems. Before, users of cryptocurrency who just held bitcoin couldn't use and access the DeFi dApps that were being developed on the Ethereum platform.
Wrapped Bitcoin Crash
On November 23, 2024, the price of Wrapped Bitcoin WBTC dropped suddenly and quickly to an all-time low of about $5,200 from $97,900.42 on Binance. This drop occurred in a clear flash collapse that did not affect the asset's price on other exchanges.
The most frequent cause of sudden crashes is an electronic mistake affecting the trading system. This caused WBTC to collapse after starting the day trading at typical price levels of about $98K. The price rose again within minutes, and the Binance exchange's Wrapped Bitcoin daily candle ended the day trading at normal levels. The day closed at the $97K price threshold value.
The sudden crash of Wrapped Bitcoin occurred a few days after it was announced that WBTC would be dropped. The exchange informed its followers on social media that "Coinbase will close trading for WBTC on December 19, 2024, around 12 PM Eastern Time."
Coinbase faces Criticism for taking WBTC off of its List
At the WBTC withdrawal announcement, Coinbase stated, "We regularly track the investments on our exchange to guarantee they fulfil our listing standards." However, it also informed users that they could still withdraw their WBTC coins.
BiT Global, WBTC's custodian, told Cointelegraph that Coinbase delisted WBTC to offer its tokenized Bitcoin product. A BiT Global representative wrote:
“It's obvious that Coinbase made this move in an effort to obtain an unfair advantage by displacing the largest and most powerful rival in WBTC and promoting their own wrapped Bitcoin product, cbBTC.”
Wrapped Bitcoin Custody
In September 2024, Coinbase introduced cbBTC during the issue surrounding Wrapped Bitcoin's move to multi-jurisdiction custody. As part of the multi-jurisdiction custodian arrangement, the private keys to the actual Bitcoin stocks, down $98,300 behind WBTC, were divided between the US, Hong Kong, and Singapore.
A response from the previous Maker community, now known as Sky, followed the crypto community's broad concerns over Tron creator Justin Sun's role in the new custodial agreement. As a result of this reaction, the Sky community ultimately voted to remove Bitcoin as trade security on the site.
