Data suggests the wrapped Bitcoin (WBTC) supply on Ethereum has dropped by around 35% because the LUNA/UST collapse last yr.

101,550 BTC Has Exited Wrapped Bitcoin Supply Since All-Time High

Based on data from the on-chain analytics firm Glassnode, about 285,000 BTC was locked into the WBTC supply at an all-time high (ATH) last yr. WBTC is a tokenized version of Bitcoin on the Ethereum blockchain that’s backed 1:1 with actual BTC, and thus all the time trades at the identical price because the crypto.

But what’s the purpose of holding it? Well, ETH as a crypto network could be very wealthy in its offerings, as its smart contracts mechanism signifies that it will possibly easily host a wide selection 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 might also select WBTC over BTC when fast transactions are required (because the Bitcoin network is usually slower than the Ethereum blockchain in processing transactions).

Now, here’s a chart that shows how the WBTC supply on the ETH network has modified throughout the previous few years:

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

As displayed within the above graph, the Bitcoin supply wrapped on Ethereum saw sharp growth throughout 2020 and 2021 because the bull market raged on. The metric slowed down in the primary half of 2022 and peaked at 285,000 BTC.

For the reason that LUNA/UST collapse back in May of last yr, the indicator has been rapidly happening as an alternative and has declined by around 35% thus far. Which means that WBTC has seen an exit of 101,550 BTC from the contract in this era.

This might suggest that the demand for Bitcoin wrapped on Ethereum is significantly lesser now than last yr. One apparent reason behind this trend is the prolonged bear market, which has led to capital exiting multiple sectors.

Certainly one of the things investors prefer to use WBTC for is the Decentralized Finance (DeFi) apps on the Ethereum blockchain. Still, the DeFi sector on ETH has seen a big decline previously yr, as DeFi total value locked (TVL) on ETH has fallen by 76% over the past yr, showing that a large amount of capital has flown out of those apps.

BTC Price

On the time of writing, Bitcoin is trading around $21,200, up 23% within the last week.

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

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