WBTC Burn Rate Surges as Demand for Bitcoin Collateralized Tokens Grows

03/02/2023 08:35 • Tech Trends • 89 views

On March 2, according to Dune Analytics data, more than 20000 WBTCs were destroyed at the contract address this week, and the circulation supply of WBTC has dropped to 153164, the lowest level since May 2021. According to the data on the chain, FalconX destroyed 11500 WBTC and 11200 WBTC respectively on February 27 and February 28.

More than 20000 WBTC were destroyed this week, and the circulation supply of WBTC reached a new low since May 2021

Analysis based on this information:

The soaring Bitcoin (BTC) prices have triggered the rise of Bitcoin collateralized tokens such as Wrapped Bitcoin (WBTC). The surging demand for such tokens is creating an opposite trend of WBTC burn, a process that removes the token from circulation. Dune Analytics data shows that over 20,000 WBTC were destroyed at the contract address this week, driving down the circulation supply to a low of 153,164. This is the lowest level recorded since May 2021.

FalconX, a crypto-trading platform, led the way by destroying 11,500 WBTC and 11,200 WBTC between February 27 and February 28. WBTC burn is a process initiated by the token holders whereby WBTC is exchanged for Bitcoin in proportion to the price at the time of burn. Burned WBTC is eradicated from the supply and cannot be converted back to Bitcoin. WBTC token holders believe this is a viable way of reducing WBTC supply while increasing the value of the token.

The cryptocurrency industry has been experiencing a spike in demand for Bitcoin collateralized tokens as ETH continues to gain prominence. The circulation of WBTC reached an all-time high of 195,558 in January 2021 as institutional investors continued to flood the market. However, as the popularity of decentralized finance (DeFi) increases, the demand for WBTC has surged, leading to a burn rate increase.

The sudden rise of WBTC burning is an indicator of increasing demand for Bitcoin collateralization in the cryptocurrency market. The trend is expected to continue as more investors lean towards DeFi and derivatives trading. As more WBTC is burned, the token’s price is expected to appreciate, thereby creating a better return on investment for early investors.

In conclusion, the surge in WBTC burning is a prominent trend in the emerging cryptocurrency market. This process is likely to continue as demand for Bitcoin collateralization increases and DeFi market continues to grow. WBTC holders’ faith in its value is reflected in the burn process, which is expected to benefit early investors in the long run.

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