The cryptocurrency industry is worried that the transfer of the wBTC might result in the dump of more than $500 million worth of Bitcoin.
Concerns have been raised by some in the community regarding the possibility of a dump when troubled loan provider Celsius transferred nearly 25,000 Wrapped Bitcoin (wBTC) valued at $528.9 million to cryptocurrency exchange FTX.
The significant payment to the exchange was made after the lending platform cleared the remaining $41.2 million in Maker (MKR) protocol debt, freeing up all of the wBTC collateral for its loan.
The community is confused about how to interpret the transfer, with some people worrying that a dump of wBTC on the exchange may soon occur, driving down the price of Bitcoin.
Others have expressed greater optimism that the action may be a prelude to Celsius exchanging their wrapped Bitcoin for BTC, which may be encouraging for depositors who have been anticipating the return of Bitcoin withdrawals on the Celsius platform. Bitcoin has increased by 8% in the last day to trade above $22,100, indicating that market participants are ignoring the news.
Following today’s news that 150,000 BTC could potentially be released into the market as Mt.Gox creditors finally receive their BTC after an eight-year wait, 25,000 wBTC were delivered to FTX.
As of now, neither Celsius nor its CEO Alex Mashinsky has made any radio announcements on the transit of funds.
According to cryptocurrency attorney Joni Pirovich, Principal of Blockchain & Digital Assets, Celsius’ settlement of its loan position with Maker will ultimately benefit its clients.
“Maker protocol relies on overcollateralized loan positions, so the loan repayment of US$41 million worth of DAI released 21,962 WBTC of capital which is now available to meet customer withdrawal requests.”
Even if Celsius decides to file for bankruptcy, Pirovich continued, consumers’ circumstances can be improved by repaying the loan and removing the collateral.
“The question is what will Celsius do with the withdrawn collateral? Keep it in reserve for customers or risk it to trade and on-lend.”
