A cryptocurrency whale is currently looking at a potential liquidation of around $28 million worth of the flagship cryptocurrency tokenized on another network in the form of Wrapped Bitcoin (WBTC).
According to on-chain analytics firm Lookonchain, the cryptocurrency whale could see its 488.45 WBTC get liquidated if the price of the flagship cryptocurrency drops to $50,429, as the health rate of their low is as low as 1.07.
The whale has notably supplied their WBTC to the protocol to borrow stablecoins, including USDT and DAI, using the fund as collateral. They also have around $41,000 worth of the native token of the Compound decentralized finance (DeFi) protocol, COMP, lent out for stablecoins.
In the total, the cryptocurrency whale has borrowed around $17.2 million worth of stablecoins and in the process earned 4,156 COMP tokens worth nearly $177,000 at current prices.
The price of the flagship cryptocurrency dropped from a $64,000 high late last month to a low below $53,000 before it started recovering. Bitcoin is now trading slightly above the $57,000 mark.
Notably, US Bitcoin exchange-traded funds (ETFs) experienced their longest streak of daily net outflows since being introduced earlier this year amid the drawdown, with investors moving around $1.2 billion out of these funds in the eight days ending September 6.
The market downturn came amid mixed employment data from the US and growing deflationary concerns in China, which are affecting trader sentiment. This instability is driving a closer correlation between cryptocurrency and traditional equities, increasing the pressure on Bitcoin as both markets struggle.
Earlier this month, sentiment in the cryptocurrency market dipped into “extreme fear” over the downturn that took over $2 trillion away from the space’s market capitalization.
The Crypto Fear & Greed Index, which serves as an aggregate for investor confidence and attitude towards the market, dropped to 22, signaling extreme fear, before recovering to now stand at 33.
The index saw a low around 6 when BTC dropped below $18,000 in 2022 after the collapse of popular cryptocurrency exchange FTX.
Featured image via Pixabay.
