08 Jul 2022 Arjun Agarwal
Celsius Transferred Over $500 Million In Wrapped BTC, Could It Spell Danger For Bitcoin?
Celsius, which suffered from a wide range of problems recently, just moved nearly 25,000 Wrapped Bitcoin (wBTC) to the FTX exchange, which immediately sparked concerns about whether the move would lead to a massive dump, which could tumble down the crypto market.
The colossal transfer came as the Celsius lending platform managed to pay off the last part of its debt to the Maker protocol, estimated at around $41.2 million. The debt payment freed the wBTC collateral the lending platform used to secure its debt.
The crypto community freaks out
Indeed, many have raised a voice of concern about whether the newly accessible tokens would be dumped back into the market, which could drown the entire crypto market, as it tries to recover from the hectic second quarter of the year.
In contrast, some crypto experts believe that Celsius is actually going to purchase Bitcoin by swapping wBTC for BTC. The news is welcomed among those who still wait for Celsius to re-open Bitcoin withdrawals on their platform.
The loan repayment is a part of the game for Celsius, which shut down Bitcoin withdrawals due to increased pressure. Crypto lawyer Joni Pirovich commented that it is now up to Celsius to decide whether to re-open the BTC withdrawals or “risk it to trade and on-lend.”
“Maker protocol relies on overcollateralized loan positions, so the loan repayment of $41 million worth of DAI released 21,962 wBTC of capital which is now available to meet customer withdrawal requests,” Pirovich added.
More “good news” for Bitcoin
The wBTC move happened just after Mt. Gox creditors got the news that their eight-year saga may soon come to an end after attorney Nobuaki Kobayashi confirmed the rumors of the exchange "preparing to make repayments" to account holders.
The total amount of funds the Mt. Gox users would anticipate is around 150,000 BTC, which, if it all ends up on the crypto market, could have the potential force to put immense pressure on the world’s leading crypto in terms of price performance.
However, Kobayashi added that there will be three options for users to redeem their funds - an "Early Lump-Sum Repayment or not," as well as receiving all or part of their funds in BTC or Bitcoin Cash (BCH).
The news immediately faced fears of crypto turmoil, as several high-profile users even predicted some other “black swan” scenarios for the crypto market, such as Tether collapsing and being unable to redeem, as with the recent TerraUSD case, a total stock market crash, a possible Taiwan invasion, and Ukraine war escalation.
Bitcoin rebounds
Despite the fears of large amounts of BTC entering the market, the price of the top crypto to date managed to climb up, after consolidating in a narrow range for the past couple of days.
Indeed, the crypto leader managed to jump over $21,000 and secure a current price point of $21,330.66 per BTC after a correction from a high of over $22,000. Trading volumes are also increasing, which could lead to a further price increase.
Ethereum’s price action is similar, but the second-largest crypto to date saw a smaller recline, thus it recorded a bigger weekly price increase, with a current price point of little over $1,200. The rest of the crypto market plays in sync, with projects like Avalanche (AVAX), Polygon (MATIC), and Cosmos (ATOM) all recoding over 20% in price increases over the past seven days.
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