The price of Wrapped Bitcoin tanked below $6,000 on Binance just a few days after Coinbase delisted it amid liquidity concerns.
Wrapped Bitcoin (WBTC), issued by crypto firm BitGo, lost nearly 95% of its value in under an hour on Binance, crashing from $98,500 to $5,209 before recovering to around $98,000 on Nov. 23.
The cause of WBTC’s sharp price drop remains unknown, with neither BitGo nor the WBTC team commenting on the flash crash. The incident comes just days after Coinbase announced it would delist WBTC due to liquidity concerns, effective Dec.19.
Simultaneously, Coinbase is expanding its presence in the wrapped Bitcoin market with its own competitor, Coinbase Wrapped Bitcoin (cbBTC).
The move further complicates the relationship between Coinbase and WBTC’s custodial partner, Justin Sun, who became involved with WBTC through a joint venture between BitGo and his companies. In August, BitGo announced a joint venture with BiTGlobal, a Hong Kong-based trust company linked to Sun.
Sun’s involvement in WBTC has led to the creation of multiple competing tokens. In addition to cBTC, crypto exchange Kraken also launches its wrapped Bitcoin called kBTC. In response to the growing competition, Sun criticized Coinbase for failing to complete a proof-of-reserves process for cbBTC.
Launched in 2019, WBTC allows Bitcoin liquidity to flow into decentralized finance ecosystems by tokenizing Bitcoin (BTC). The token is pegged 1:1 with Bitcoin and currently has a market capitalization nearing the $14 billion mark.
