Originally published on: November 24, 2024
In a shocking turn of events, the price of Wrapped Bitcoin (WBTC) on Binance experienced a rapid and unprecedented flash crash, dropping to an all-time low of approximately $5,200 on November 23. Interestingly, this plunge did not impact the value of the asset on other exchanges, leaving traders puzzled.
The day started off with WBTC trading at its usual levels of around $98K before the sudden nosedive, attributed to an electronic glitch affecting Binance’s trading system. Flash crashes, caused by such technical errors, are not uncommon in the world of cryptocurrency trading.
Fortunately, the price of Wrapped Bitcoin quickly recovered, closing the day at around $97K on the Binance platform and stabilizing to normal levels thereafter. The flash crash incident occurred just days after Coinbase announced its decision to delist WBTC, sending shockwaves through the crypto community.
Coinbase revealed plans to suspend trading for WBTC on December 19, 2024, citing internal considerations. Despite this move, the exchange assured its users that their WBTC holdings would remain accessible for withdrawal. Speculations arose that Coinbase’s own tokenized Bitcoin product, cbBTC, may have played a role in the delisting decision.
BiT Global, the custodian for WBTC, alleged that Coinbase favored cbBTC over other Bitcoin wrappers, leading to the delisting of WBTC. The controversy surrounding the custody structure of Wrapped Bitcoin, involving multiple jurisdictions, only added fuel to the fire.
The introduction of cbBTC by Coinbase, in the midst of a custody debate, brought further scrutiny to the situation. Tron founder Justin Sun’s involvement in the custodial agreement raised eyebrows within the crypto community, leading to a chain of events that resulted in the Sky community voting to remove WBTC as a trading collateral on their platform.
As the crypto space continues to evolve and adapt, incidents like the Wrapped Bitcoin flash crash serve as a reminder of the complexities and challenges faced by traders and investors alike. Stay informed and stay vigilant as you navigate the exciting world of decentralized finance.
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