Originally published on: November 24, 2024
In a surprising turn of events, the price of Wrapped Bitcoin (WBTC) on the Binance exchange experienced a flash crash, hitting an all-time low of approximately $5,200 on November 23. This sudden drop, attributed to an electronic error affecting the trading system, did not impact WBTC’s price on other exchanges.
The day started with WBTC trading at typical levels around $98K before the crash occurred. Flash crashes, often caused by technical glitches, can lead to sharp and rapid declines in asset prices, only to recover shortly afterward. Indeed, WBTC quickly rebounded and closed the day’s trading at around $97K on Binance, where it currently remains stable.
Coinbase’s recent announcement adding to the drama, declaring its decision to delist WBTC by December 19, 2024, at 12 PM Eastern Time. Despite this move, Coinbase reassured users that their WBTC holdings would remain accessible for withdrawal.
In response, BiT Global, the custodian for WBTC, suggested that Coinbase’s decision was motivated by a desire to promote its proprietary tokenized Bitcoin product, cbBTC, over competing Bitcoin wrappers. Allegations of favoritism emerged, especially following controversies surrounding WBTC’s transition to a multi-jurisdictional custody model.
With Tron founder Justin Sun’s involvement in the custodial arrangement and the subsequent backlash from the crypto community, the once-popular WBTC faced challenges. The former Maker community, now known as Sky, even voted to remove WBTC as a trading collateral on their platform.
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