Bridges and Cross-Chain Risk
An asset is native to one chain. Bitcoin exists on Bitcoin, and a token issued on Ethereum exists on Ethereum. There is no mechanism by which either simply moves somewhere else, because a chain has no way to observe or affect another chain's state.
So "sending BTC to Ethereum" never happens literally. What happens is that the asset is immobilised on one side and a claim on it is created on the other. Every bridge is a variation on that trade, and the variations differ mainly in who you are trusting.
That question matters more here than its equivalent does in traditional markets. Moving dollars between two brokers is a transfer between regulated custodians, with recourse if it goes wrong. Moving an asset between two chains means handing it to a piece of software that holds the originals for everyone who has ever made the same trip, with no recourse of any kind if that software is compromised.
It also happens constantly, because the pre-positioning constraint applies across chains exactly as it applies across venues. A firm quoting on several chains needs inventory sitting on each of them, and inventory that arrived by bridge is inventory whose value depends on that bridge still being solvent.
Three designs
The asset never moves. What differs is who holds the original and what your wrapped token is a claim on.
A wrapped asset is a claim, not the asset
This is the point that gets lost. Wrapped BTC on Ethereum is not Bitcoin. It is a token whose value depends entirely on the assumption that the locked Bitcoin behind it still exists and is still redeemable.
When that assumption is doubted, the wrapped version trades at a discount to the real one, and it does so exactly when everyone wants out. It is the same structure as a stablecoin depeg: a claim trading below the thing it claims, and correlated across every position that touches it.
Holding a wrapped asset is holding credit exposure to the bridge, denominated in the underlying. Size it as a counterparty position, not as the asset it is named after.
Why bridges are the most attacked infrastructure in crypto
The economics are unhelpful. A lock-and-mint bridge accumulates every asset ever bridged into one pot, so the amount at risk grows with adoption while the code securing it does not change. That pot is public, its size is visible on-chain, and the contract's logic is readable by anyone.
Several of the largest thefts in the asset class have been bridge compromises rather than exchange failures or protocol bugs, and the pattern is consistent: the value concentrated in one place exceeded what the validation around it justified.
What it means for trading
Cross-chain arbitrage has a wide band, for the same reason cross-exchange does. The gap between the same asset's price on two chains persists because closing it means bridging, and bridging costs a fee, takes time, and carries the risk above. That is the pre-positioning constraint with an extra hazard attached.
Inventory on both sides is the strategy. As with venues, a firm holds balances on every chain it trades rather than moving capital to opportunities. Bridging is for periodic rebalancing, not for capturing a trade.
Bridge risk is a position you hold continuously. Balances sitting in wrapped form are exposed for as long as they sit there, whether or not you are trading. Treat the aggregate as a limit, the same way a desk limits exposure to any single unrated counterparty.
Before treating a cross-chain spread as an opportunity, price the bridge: the fee, the time the capital is in transit and unhedged, and what fraction of your book would be unrecoverable if the bridge failed while your funds were inside it. Most visible cross-chain spreads do not survive that third term.