The monthly supply of Wrapped Bitcoin (WBTC) dropped to -15.25% on Tuesday.

Data from Dune shows that the current level of circulating supply for WBTC has dropped to 153,164 – the lowest level since May 2021.

The drastic reduction in WBTC was partly thanks to 11,500 tokens that were burned by an address tied to bankrupt crypto lender Celsius. These tokens, worth around $270 million at the time of writing, were almost immediately redistributed to a wallet on crypto brokerage FalconX, according to analysts at Ergo.

This transaction is the second largest WBTC redemption in history, noted Eliézer Ndinga, head of research at

Blockchain analytics company PeckShield found that 10,628 of these WBTC tokens originated from FTX close to eight months ago. 

WBTC is an ERC-20 token that is pegged to the value of Bitcoin on a 1:1 basis. It represents Bitcoin on the Ethereum blockchain and is a way for users to gain exposure to Ethereum-based DeFi protocols like Aave, Compound and Maker.

A burn transaction such as this one is initiated when users want to convert their WBTC back into native Bitcoin. Some market participants are anticipating that, in doing so, Celsius may be looking to sell its Bitcoin, which could add further downward pressure to the market.

Celsius, which declared bankruptcy in July 2022, won the rights to $4.2 billion worth of users’ crypto assets held in customers’ Earn Accounts in January. This means that the bankrupt crypto lender is free to sell the $23 million worth of stablecoins held in these accounts.

The firm has also reached a deal with investment firm NovaWulf to end its bankruptcy earlier this month, which would see borrowers get back up to 85% of their assets if they move their holdings to NovaWulf’s platform. However, the Wall Street Journal reported that Celsius creditors have criticized this plan, with many holding the view that the new company run by NovaWulf won’t sustain long enough to return their collateral.