The Binance platform experienced a shocking flash crash of $WBTC, with prices plummeting and causing market turbulence.
On November 23, 2024, a dramatic flash crash occurred for Wrapped Bitcoin ($WBTC) on the Binance platform. The original trading price of $WBTC was $98,000, which suddenly dropped to a historic low of $5,209, a decline of nearly 90%. Fortunately, this flash crash only occurred on the Binance platform, and other exchanges were not affected. It is understood that this plunge may have been caused by an electronic error in the trading system. The price quickly stabilized after the flash crash, with the closing price returning to around $97,000 that day. This sudden drop not only drew significant attention from the cryptocurrency market but also prompted investors to closely monitor the market dynamics behind WBTC.
Source: Binance exchange screenshot. The original trading price of $WBTC was $98,000, which suddenly plummeted to a historic low of $5,209, a drop of nearly 90%.
Coinbase unexpectedly delisted $WBTC, and large-scale destruction triggered market panic.
In fact, before this flash crash event, Coinbase had suddenly announced on November 19 that it would delist $WBTC on December 19.
Coinbase stated: "We will regularly monitor the assets on the exchange to ensure they meet our listing standards."
Despite this, Coinbase also assured users that their $WBTC funds remain withdrawable. According to Etherscan data, the supply of $WBTC on Ethereum decreased significantly from 146,000 coins on November 16 to 140,000 coins on November 24, a reduction of 5,844 coins in just 8 days. Notably, there was a destruction transaction of as much as 5,182.34 coins of $WBTC, worth over $500 million at the then-current Bitcoin exchange rate.
Regarding such a large-scale movement of $WBTC, the operator of btcparser.com told the media: "Seeing such a massive movement of $WBTC on the Ethereum chain is very rare, especially since this time it seems to be a direct destruction." Such actions undoubtedly intensified market unease.
Custody disputes trigger a chain reaction, and $WBTC faces multiple challenges.
$WBTC has recently come under scrutiny due to its custodian Bitgo announcing a joint venture with Bit Global, associated with Sun Yuchen. This decision has sparked strong unease within the crypto community, although Bitgo's CEO Mike Belshe quickly clarified: "I suggest you meet with the Bit Global team to understand how Bitgo ensures custody." However, this explanation seems to have failed to quell market concerns.
BiT Global told the media: "Coinbase's decision to delist $WBTC is clearly aimed at promoting its own wrapped Bitcoin product $cbBTC, which will be launched in September 2024."
In addition to the competitive pressure from Coinbase, the decision to turn $WBTC to multi-jurisdictional custody has also raised more doubts within the crypto community. This new custody structure disperses the custody rights of the Bitcoin private keys behind $WBTC across the United States, Hong Kong, and Singapore.
Further Reading
Coinbase enters the Bitcoin ecosystem! What is cbBTC?
cbBTC has faced criticism for its lack of transparency! Will Coinbase's launch of reserve proofs enhance trust?
Intensifying market competition, the wrapped Bitcoin ecosystem faces restructuring.
In the wrapped Bitcoin market, $WBTC faces challenges from multiple competitors. In addition to Coinbase's $cbBTC, there are also $BTCB on the BNB chain and $tBTC from Threshold Network.
Among them, $tBTC offers decentralized, permissionless cross-chain services between Bitcoin and Ethereum, bringing new options to the market. This series of controversies ultimately led the former Maker community (now known as Sky) to vote to remove $WBTC from the platform's trading collateral, further weakening $WBTC's position in the market.
As the market for BTC derivatives continues to develop, competition between newer products and established giants like $WBTC is reshaping the competitive landscape of the crypto industry. This large-scale on-chain destruction event not only reflects the market's wavering confidence in $WBTC but also possibly heralds significant changes to the wrapped Bitcoin market.
[Disclaimer] The market has risks, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article fit their specific situations. Investing based on this is at your own risk.
‘The community is buzzing! Binance's ‘this coin’ crashed 90%, was it caused by Coinbase's destruction?’ This article was first published on ‘Crypto City’
