Key Points
- Wrapped Bitcoin (WBTC) price plummeted by nearly 95% on Binance, following Coinbase’s delisting due to liquidity issues.
- Coinbase is launching its own competitor, Coinbase Wrapped Bitcoin (cbBTC), intensifying the competition in the wrapped Bitcoin market.
The value of Wrapped Bitcoin (WBTC), a product of BitGo, experienced a significant drop on Binance.
In less than an hour, it fell from $98,500 to $5,209, a decrease of almost 95%. The price later rebounded to approximately $98,000 on November 23.
Reason for the Price Drop
The reason behind this sudden price drop remains unclear. Neither BitGo nor the WBTC team have provided any comments on the flash crash.
This incident occurred shortly after Coinbase declared it would remove WBTC from its listing due to liquidity issues, with the delisting effective from December 19.
Coinbase’s Entry into the Wrapped Bitcoin Market
Coinbase is now entering the wrapped Bitcoin market with its own version, Coinbase Wrapped Bitcoin (cbBTC).
This development further strains the relationship between Coinbase and WBTC’s custodial partner, Justin Sun. Sun became involved with WBTC through a partnership between BitGo and his companies.
In August, BitGo announced a partnership with BiTGlobal, a trust company based in Hong Kong that has links to Sun.
Sun’s involvement in WBTC has resulted in the creation of several competing tokens. Besides cbBTC, crypto exchange Kraken has also introduced its own version of wrapped Bitcoin, known as kBTC.
In response to the increasing competition, Sun criticized Coinbase for not completing a proof-of-reserves process for cbBTC.
WBTC, which was launched in 2019, allows Bitcoin (BTC) liquidity to flow into decentralized finance ecosystems by tokenizing Bitcoin. The token maintains a 1:1 peg with Bitcoin and currently has a market capitalization close to $14 billion.