The fate of Binance USD (BUSD), the stablecoin introduced by Binance, hangs in the balance as its market capitalization has experienced a significant decline of more than 80% by 2023.
From November 2022 to June of this year, the market capitalization of BUSD decreased from USD23 billion to USD4 billion. Notably, the capitalization suffered an 18% loss in May alone, as reported by CCData, an analysis company.
TrueUSD (TUSD) Gains Traction As BUSD’s Market Cap Declines
As the market capitalization of BUSD continues to decline and reaches a critical level, representing less than 5% of the total stablecoin market capitalization, Binance began actively promoting the adoption of TrueUSD (TUSD).
While the market capitalization of TUSD is still slightly lower than that of BUSD, which currently stands at over USD3.1 billion, it has surpassed BUSD in terms of trading volume. According to data provided by CCData, TUSD trading volumes have tripled, reflecting the growing interest and use of the stablecoin.
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TrueUSD (TUSD), introduced in 2017 by TrustToken, has emerged as the fifth largest stablecoin in the market, closely following BUSD. Operating as an Ethereum-based ERC-20 token, TUSD secures its value in dollar reserves deposited in several US-based banking entities. The company behind TUSD ensures a 1:1 conversion of the US currency, instilling confidence in its stability and reliability among users.
While the market capitalization of BUSD has experienced a significant decline, the growing popularity and trading volume of TUSD serves as a testament to the growing demand for an alternative stablecoin option. Also, Binance’s move to promoting TUSD suggests a strategic response to the changing landscape of stablecoin usage and market dynamics.
The sharp decline in BUSD’s market capitalization can be attributed to its impending halt. In February 2023, NewsBTC reported that Paxos will stop issuing the BUSD stablecoin due to an ongoing lawsuit filed by the United States Securities and Exchange Commission (SEC).
According to Paxos’ official statement, BUSD can be redeemed until February 24, 2024, marking its potential exit date from the market.
Investors Move Into USDT As It Approaches All-Time High Capitalization
As the market capitalization of Tether (USDT) continues to rise steadily, approaching its all-time high, investors are taking notice and taking strategic steps. According to data from CoinMarketCap, the current market capitalization of USDT stands at $82.9 billion (USD), close to the previous peak of $83.2 billion, reached in May 2022. This upward trajectory has prompted investors to diversify their portfolios and explore alternative stablecoin options.
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Also, investors are attracted to USDT because of its stability and pegging to the US dollar, which offers a reliable store of value amid market volatility. With its widespread acceptance and liquidity, USDT has become a preferred choice for traders, providing a convenient and safe way to preserve their capital during volatile market conditions.
At press time, USDT is trading at $0.9780 per coin with a 24-hour price increase of 1.38%.
Featured image from iStock, charts from Tradingview and CCData