BUSD Stablecoin Market Shrinks by 3 Billion in Six Days
- BUSD has seen a significant decline in supply over the past month.
- Binance is currently the most active exchange for BUSD transactions.
- Other stablecoins, such as Tether, have been affected by the BUSD situation.
The past month has seen a significant portion of the BUSD token supply being redeemed after the stablecoin’s issuer, Paxos, announced that it will no longer be minted. The crypto community is left pondering the extent of the impact the first-of-its-kind situation will have on the broader market.
The Decline of Stablecoins
On February 13, 2023, Paxos announced that following a suit by the SEC that BUSD would no longer be minted. The case resulted in a rapid redemption of BUSD, with $290 million of the stablecoin being redeemed within eight hours of the revelation.
Since minting ceased, BUSD token supply has declined 17.77%, which accounted for a nearly 3 billion BUSD tokens decrease. The BUSD token has been 1-1 backed to the Dollar, which means that every token removed from the supply is reflected in the market capitalization.
BUSD Market Capitalization chart in USD. Source: TradingView
The most active exchange dealing with BUSD tokens is Binance. Following the recent developments surrounding BUSD, Binance confirmed that it is exploring other issuers and stablecoins, including those pegged to different currencies, according to its CEO Changpeng “CZ” Zhao. While the exchange has not yet announced a replacement, it will continue to support BUSD in the meantime.
As of February 19, 2023, 10.9 billion BUSD has been possessed by Binance, according to Nansen, a blockchain intelligence firm. BUSD’s losses may show that those seeking stablecoin liquidity are fleeing to other stablecoins.
Tether Emerges as a Winner
Profiting from this turbulent period, Tether’s (USDT) supply has increased by 5.8%, resulting in a market valuation of almost $70 billion. Tether has historically been the most popular trading pair for BUSD.
Over the last 30 days, the supply of BUSD has decreased by 19.2%. Comparatively, USDC’s supply has only decreased by 2.9% during the same time period.. Meanwhile, the supply of Paxos’ other stablecoins, USDP and PAXG, have seen decreases of 19.3% and 11.3% respectively in the last 30 days.
On the Flipside
- The dominance of stablecoins in the cryptocurrency market capitalization has steadily increased, particularly during the bear market.
- As of this writing, Binance has not announced a replacement for BUSD and will continue to support them in the meantime.
Why You Should Care
Given BUSD’s ties to Binance, the world’s largest exchange, which inherently affects the entire crypto market, the recent developments surrounding BUSD have captured the attention of the stablecoin industry, with many wondering about the future of stablecoins and their position within the cryptocurrency market.
To hear what Changpeng Zhao (CZ), CEO of Binance, has said about this:
CZ Downplays Links to BUSD: But 90% of BUSD Is on Binance
To get yourself up-to-date on the Paxos lawsuit, read here:
SEC to Sue Paxos Over BUSD, Ordered to Stop Issuance
Read more: https://dailycoin.com/busd-stablecoin-market-shrinks-by-3-billion-in-six-days/
Text source: DailyCoin.com
