Bitcoin Backed Token Announced By Coinbase: BTC Holders Can Now Access DeFi Apps on Base

Bitcoin has surged over 5% since Wednesday, but volatility and uncertainty have clouded the past few weeks. However, a significant announcement from Coinbase is bringing fresh optimism for BTC holders eager to explore DeFi opportunities.

As of yesterday, Coinbase launched Coinbase Wrapped BTC (cbBTC), an ERC20 token backed 1:1 by Bitcoin (BTC) held by Coinbase. Initially, cbBTC will be supported on Base and Ethereum, with plans to expand to more chains.

This move allows Bitcoin holders to unlock new ways to engage with decentralized finance (DeFi), providing greater flexibility in using their BTC across multiple platforms.

Coinbase’s introduction of cbBTC marks another step forward in increasing economic freedom in the crypto space. BTC users now have more opportunities to leverage their assets while staying connected to DeFi’s growing ecosystem.

Bitcoin Is Now Available On Base

Coinbase is taking a groundbreaking step by linking deep off-chain Bitcoin liquidity to fast, low-cost financial networks on Base and Ethereum. 

Through cbBTC, the company enables Bitcoin holders to use their assets across more chains, fostering a more interconnected financial ecosystem. Wrapped assets like cbBTC allow users to utilize Bitcoin in new ways, helping bridge the gap between traditional Bitcoin holding and decentralized finance (DeFi).

cbBTC eliminates the friction of moving assets between chains by offering seamless compatibility with DeFi applications. This opens the door to novel use cases such as providing Bitcoin as liquidity to DeFi protocols or as collateral for borrowing other crypto assets.

At launch, cbBTC will be available on decentralized exchanges (DEXs) such as Aerodrome, Curve, Matcha, and Uniswap and lending platforms like Aave, Compound, Morpho, Moonwell, and Spark. Additionally, cbBTC can be used in real-world asset (RWA) protocols like Maple.

When Coinbase users send Bitcoin from their accounts to an address on Base or Ethereum, their BTC automatically converts 1:1 into cbBTC. Likewise, when users receive cbBTC in their Coinbase accounts, it will convert back into BTC.

Importantly, cbBTC will not have a separate trading pair or order book on Coinbase but will be tradable through DEXs via Coinbase Wallet and possibly other third-party exchanges that choose to support it.

Bitcoin Price Testing Key Resistance

Bitcoin (BTC) trades at $58,302, inching closer to higher prices. However, for a sustained upward move, it must break above the 4-hour 200 exponential moving average (EMA) at $58,717—just under 1% from the current level. 

This EMA has been a crucial short-term resistance since early August, highlighting its importance. A successful breach and hold above this EMA could signal a trend change and potentially lead BTC to test the next significant supply level of around $61,500. This level will be a key resistance point to watch.

Conversely, if Bitcoin struggles to close above $60,000 in the coming days, a consolidation phase or even a deeper correction may be on the horizon. This scenario would suggest that the current resistance is holding firm, and BTC might face further challenges in its attempt to push higher. Traders and investors should monitor BTC’s ability to overcome this resistance to gain insight into its near-term trajectory.

Featured image from Dall-E, chart from TradingView