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Wrapped Bitcoin ‘Burns’ Outpaced Minting for the First Time in December
BitGo “unwrapped” over 11,600 WBTC last month.
By Zack Voell
Updated Mar 6, 2023, 3:41 p.m. Published Jan 9, 2021, 6:40 p.m.
Traders are swapping their tokenized bitcoins for the real thing more than ever.
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- BitGo saw a record 11,613 wrapped bitcoin (WBTC) swapped for real bitcoin in December, with only 2,731 BTC exchanged for the bitcoin-backed ERC-20 tokens last month.
- December marked the first time in the young project’s history that “burns,” the reversion of WBTC back to BTC, have outnumbered “mints.”
- The total value of the “burned” WBTC is approximately $235 million, based on bitcoin’s price at the time the tokens were swapped for BTC.
- Diminishing yields in decentralized finance (DeFi), a primary use case for WBTC, and increased trading activity on traditional cryptocurrency exchanges amid bitcoin’s recent eye-popping surge are likely reasons for the increase in burns and slowed rate of minting.
- Most of the burns came from trading firms Alameda Research and Three Arrows Capital.
- BitGo’s Wrapped Bitcoin project gained wide popularity through Q3 and early Q4 2020 amid a DeFi frenzy that saw over 124,000 BTC tokenized on Ethereum at its peak after starting the year with less than 600 BTC.
- In mid August, demand for WBTC was so high that bitcoins were being tokenized faster than they were being mined.
- To date, roughly 110,000 WBTC are still circulating in the DeFi ecosystem.
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Bitcoin’s Deep Correction Sets Stage for December Rebound, Says K33 Research
K33 Research says market fear is outweighing fundamentals as bitcoin nears key levels. December could offer an entry point for bold investors.
What to know:
- K33 Research says bitcoin’s steep correction shows signs of bottoming, with December potentially marking a turning point.
- The firm has argued that the market is overreacting to long-term risks while ignoring near-term signals of strength, like low leverage and solid support levels.
- With likely policy shifts ahead and cautious positioning in futures, K33 sees more upside potential than risk of another major collapse.
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