The supply of wrapped or tokenized bitcoin has come to a halt as demand for decentralized finance cools amid a widespread market crash.
One consequence of the onset of a bear market and the fall in cryptocurrency prices is the lack of demand for decentralized finance. This has an impact on the supply of tokenized bitcoin which has stagnated recently.
Wrapped Bitcoin (wBTC) enables bitcoin holders to dabble in Ethereum-based DeFi without having to sell or convert their assets. Meaning, bitcoin is tokenized as an ERC-20 asset on the Ethereum network. Over the years, the demand for DeFi as well as the supply of WBTC has increased. Also, the supply has increased by 113% during the last 12 months.
wbtc starts falling
However, the trend is starting to show signs of reversal as supply has stalled over the past few months. According to Messari, the supply of WBTC has declined since December after hitting an all-time high of 271,257 BTC in January.
The current supply of wBTC is 263,162 coins, which are worth around $9.2 billion at current prices. It is down 3% from that peak and appears to be entering a period of decline. Data from Coin Metrics shows a similar pattern.
Compared to wrapped Ethereum (wETH), there are currently 7.49 million tokens worth an estimated $17.4 billion, according to Etherscan.
DeFi TVL decline
As the crypto markets continue to decline, the total value locked in DeFi has also declined. Different analytics platforms have different methods of TVL measurement, but they all have the same trend.
Currently, DeFiLlama is reporting TVL of $183 billion, down 28% from its all-time high of $255 billion on December 1. Nevertheless, TVL in DeFi has grown at a steady rate over the past 12 months, an increase of 252% from the same time last year.
DappRadar’s TVL figure is slightly lower at $99 billion, but has registered a massive 45% drop from its November 10 high of $182 billion.
The decline in TVL is likely to be directly linked to the fall in asset prices over the past few months, rather than investors collectively exiting DeFi. The crypto market has now retreated 47% from its total market cap which stood at just over $3 trillion in November.