For the past few weeks, investors and users on the cryptocurrency exchanges have started to drift away from Binance USD (BUS).
There was a time when the token was in really high demand, earning it the rank of the third-largest stablecoin in terms of valuation.
However, the situation is constantly worsening for the stablecoin since the beginning of 2023. The performance and the valuation of the stablecoin have been dwindling.
This is because the investors have stopped taking interest in the token and they are now going for other stablecoins.
The latest report from February shows that the supply of the stablecoin has slumped tremendously in the month of February. The records show that a 60% slump has been registered by the token’s supply.
It was mainly in the middle of February when the supply for BUSD recorded a massive shrink.
BUSD’s Stablecoin Market Share
Supply reduction is not the only problem that stablecoin has been facing. The stablecoin has also lost its market prominence.
In the year 2022, the overall share of BUSD in the stablecoin market was somewhere around 20%. However, as of February 2023, the share of the stablecoin has fallen to 7.3%.
This is very alarming not only for the BUSD issuers but also for the communities that had been investing heavily in the token.
Despite the shrink, BUSD is still the third-largest stablecoin in the market in terms of valuation. This is not because other tokens have lost their valuations.
It is mainly because other stablecoins are still after adoption and their prominence is yet to experience a boost.
The stablecoin right after Binance USD is MakerDAO. It is a decentralized stablecoin that ranks as the fourth largest token. Its supply currently stands at $5 billion, which is half the valuation of the BUSD token.
Despite the downfalls and the upsets, Tether (USDT) still dominates the stablecoin market with a 52% share.
Who is Behind BUSD’s Demise?
The entity that is behind the demise and the market decline of the BUSD token is the securities regulator of the United States, the US SEC.
On February 13, the regulator surprised two major entities from the cryptocurrency industry that were Binance and Paxos.
It reportedly took legal action against the issuer of the BUSD stablecoin that is Paxos. An order was issued that strictly prohibited Paxos to issue the BUSD stablecoin.
The other entity was Binance because BUSD is the stablecoin on the particular exchange. The exchange lets the users convert their stablecoins and cryptocurrencies into BUSD.
However, as the supply of the BUSD has been banned, no more BUSD will be thrown into the market. This means that the stablecoin is not a good choice for those who want to have access to an unlimited supply of stablecoins.
