The Binance USD (BUSD) stablecoin pegged to the US dollar now occupies fourth place in terms of market capitalization in the stablecoin market. Data from CoinMarketCap shows a BUSD capitalization drop of over $1 billion in the past 30 days.
Why is Binance USD price dropping so much?
Several events each contributed in their own way to dampen the rise of the BUSD. First, the collapse of FTX that Binance is believed to be involved in has dealt a blow to its stablecoin. Second, a report published in December 2022 seeming to indicate that the US Department of Justice would target Binance pushes holders to withdraw $3.6 billion from their accounts in 7 days.
To make matters worse, in February 2023, Paxos Trust, the company that produces the BUSD tokens is forced by regulatory bodies to stop issuing BUSD. This reduced the market share of BUSD. It fell from $15.88 billion on February 12 to $8.38 billion on March 13.
Finally, again recently, the SEC, policeman of the American stock market, drags Binance in court. The crypto exchange allegedly offered unregistered securities. The US regulator has brought 13 charges against the exchange, including unregistered offers and sales of BNB.
What next for BUSD after Binance’s troubles?
At the moment, the market cap of Binance’s stablecoin stands at $4.3 billion. This is down 29% from the $5.54 billion it was worth a month ago on May 18. But, the decline dates from a long time ago. Indeed, BUSD has been on a downward trend since December 2022. At the time, its market capitalization had just crossed $23 billion.
But BUSD is not the only stablecoin to experience declines. Circle (USDC) also saw its market share will drop from 34.88% in May 2022 to 23.05% in May 2023. However, Tether (USDT) appears to be doing well as it rallied to its all-time high.
The United States, through its regulatory bodies, has made life difficult for cryptocurrencies. US dollar-backed stablecoins have been at greater risk of demise. Why, despite this hostility, are we not seeing more stablecoins backed by other currencies like the euro?
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