\n<\/p>\n
The market contagion from crypto exchange FTX\u2019s swift collapse has spread to a key digital asset: wrapped bitcoin, a widely traded clone of the largest cryptocurrency.<\/p>\n
According to a new report from crypto analysis firm Kaiko, wrapped bitcoin (WBTC<\/a>), the largest wrapped version of bitcoin<\/a> on the Ethereum blockchain, has traded at a discount to bitcoin\u2019s price since Sam Bankman-Fried’s embattled FTX exchange filed for bankruptcy protection<\/a> on Nov. 11.<\/p>\n Kaiko said WBTC\u2019s discount dropped to as low as 1.5% Friday after investors reacted to questions posed on Twitter<\/a> about whether WBTC is fully backed. The rumor was based on data from Messari’s dashboard on Dune Analysis<\/a> that says FTX\u2019s sister company, Alameda Research, was a top WBTC merchant by the number of tokens minted.<\/p>\n Chen Fang, chief operating officer for BitGo, WBTC’s official custodian, quickly clarified<\/a> that every WBTC is \u201c1:1 backed and verifiable on-chain.\u201d<\/p>\n Friday\u2019s rumors \u201cappear to be unfounded\u201d as Alameda would have needed to send all BTC to BitGo, meaning that the now-defunct exchange \u201cnever actually took custody of the BTC themselves,\u201d the Kaiko report stated.<\/p>\n \u201cAlameda was a \u2018WBTC merchant,\u2019 which means they\u2019d accept BTC from customers and send it to BitGo to mint WBTC,\u201d crypto influencer Udi Wertheimer tweeted<\/a>. \u201cAlameda NEVER custodied BTC themselves!\u201d<\/p>\n Despite the clarification, WBTC\u2019s discount is still at 0.5%, according to Kaiko.<\/p>\n Wrapped assets like WBTC are meant to be pegged to the value of the original asset. They are often used for trading, lending and borrowing on decentralized-finance (DeFi<\/a>) platforms.<\/p>\n Bitcoin (BTC<\/a>)\u2019s price was recently trading at $16,143 Monday, while WBTC was changing hands at $16,112.<\/p>\n FTX\u2019s fallout gave birth to a phenomenon that Kaiko analysts previously have termed the \u201cAlameda Gap\u201d \u2013 a drop in liquidity<\/a> across various crypto assets in the market, and altcoins\u2019 liquidity took the hits more.<\/p>\n Kaiko said market makers are providing liquidity \u201casymmetrically, with spreads widening a lot more for higher-beta altcoins.\u201d<\/p>\n