Bitcoin wrapped on Ethereum has fallen 35% since the last peak

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Data suggests that the supply of Wrapped Bitcoin (WBTC) on Ethereum has fallen by around 35% since the collapse of LUNA/UST last year.

101,550 BTC left bitcoin supply shrouded from all-time high

According to data from on-chain analytics firm Glassnode, around 285,000 BTC was locked up in WBTC supply at an all-time high (ATH) last year. WBTC is a tokenized version of Bitcoin on the Ethereum blockchain that is backed 1:1 with actual BTC, and therefore always trades at the same price as crypto.

But what’s the point of holding it? Well, ETH as a cryptonet is very rich in offerings, as its smart contracts mechanism means that it can easily host a wide variety of constructs on its blockchain. Since WBTC is an ERC-20 token, its holders can gain exposure to BTC while leveraging the Ethereum blockchain.

Investors can also choose WBTC over BTC when fast transactions are needed (because the Bitcoin network is generally slower than the Ethereum blockchain in processing transactions).

Now, here is a chart that shows how the WBTC supply on the ETH network has changed over the past few years:

The value of the metric seems to have plunged in recent weeks | Source: Glassnode on Twitter

As the chart above shows, the supply of Bitcoin wrapped on Ethereum saw strong growth throughout 2020 and 2021 as the bull market raged. The metric slowed in the first half of 2022 and peaked at 285,000 BTC.

Since the collapse of LUNA/UST in May last year, the indicator has fallen rapidly and is down around 35% so far. This means that WBTC saw an outflow of 101,550 BTC from the contract during this period.

This would suggest that demand for Bitcoin wrapped on Ethereum is significantly less now than it was last year. One of the apparent reasons for this trend is the prolonged bear market, which has driven capital out of several sectors.

One of the things investors like to use WBTC for is Decentralized Finance (DeFi) applications on the Ethereum blockchain. Still, the DeFi sector on ETH has seen a significant decline over the past year, as the total DeFi value locked (TVL) on ETH has fallen by 76% over the past year, showing that a massive amount of capital has soared from these applications. .

BTC price

As of this writing, Bitcoin is trading around $21,200, up 23% in the past week.

Looks like the value of the crypto has been moving sideways since hitting the $21,000 level | Source: BTCUSD on TradingView

Featured image of Pierre Borthiry – Peiobty at Unsplash.com, charts from TradingView.com, Glassnode.com

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