BUSD (Binance’s stablecoin) loses $2 billion in a month, explained
The Binance USD (BUSD) stablecoin continues to lose ground against other stablecoins, and over the past month has lost up to $2 billion in market capitalization.
At the lowest Wednesday January 25, 2023, BUSD market capitalization reached $15.3 billiona drop of more than $2 billion from the market capitalization of $17.5 billion recorded on the same date last December.
The fall in BUSD market capitalization is notable given thatno similar falls were seen over the same period for other major stablecoins such as Tether (USDT) and USD Coin (USDC). A possible explanation for the fall of the BUSD could be the Binance Fears After FTX Collapse.
In mid-December last year, Binance saw withdrawals from its platform of more than 3 billion dollars in the space of just 24 hours, with traders fearing the exchange could meet a fate similar to that of FTX. The increase in withdrawals then led Binance CEO Changpeng Zhao, better known as CZ, to reassure users that everything was fine with the exchange.
According to CZ, Some people had attacked Binance not because it had a problem, but because they don’t like centralized platforms. “It doesn’t matter if a CEX helps in the rapid adoption of cryptocurrency, they just hate the notion of CEX,” CZ said at the time.
The community speculated on the market capitalization of BUSD
On Twitter, some in the crypto community are currently speculating that most of the buying pressure is on Bitcoin (BTC) since the year-to-date BUSD chart.
After hitting a low of around $16,500 at the start of the year, Bitcoin has been consolidating around the $23,000 mark for the past few days.
Of those who have hinted that theabnormal bitcoin buying activity could be coming from BUSDwe find the popular Twitter user @noblemillions, who wondered “Why are they doing this?”.
Other users also commented on the situation, a popular Bitcoin analyst claimed that BTC’s rise from $17,000 to $23,000 was “entirely conditioned by the BUSD“.
The massive purchase of BTC with BUSD would explain the drop in market capitalization of this stablecoin, because there would simply be less demand.
BUSD is not issued by Binance
It is interesting to note that BUSD is not issued by Binance himself, but rather by Paxos Trust Companywhich uses the Binance name.
Paxos is a regulated trust company in the United States that regularly publishes detailed reports on the support of the stablecoins it issues. According to the last report certificate of November 2022, BUSD is fully backed by a combination of US government bonds and US dollars.
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