BUSD Drives 19% Decline in Stablecoin Transfer Volumes

Stablecoin transfer volumes have experienced a significant dip, with a decline of 19.2% in the past week, led by a slowdown in the use of Binance's BUSD. The decline in volume represents a continued downward trend in the stablecoin's trajectory in recent months. In addition to transaction volume, BUSD's market capitalization has also been falling, dropping below $7 billion on April 15th, the lowest amount in circulation since April 2021.

Declining stablecoin supplies are not limited to BUSD. Other major stablecoins like USDC and TUSD have also seen their total supply dwindle. According to BeInCrypto, the top four stablecoins have seen their market capitalization shrink by 23% from peak levels. Since their respective peaks, USDC's supply has fallen by $20 billion, and BUSD's supply has lost $11 billion. While less dramatic, supplies of TUSD and Dai have also dropped $1.3 billion and $4.4 billion, respectively.

It is important to note that the peak market caps of stablecoins were observed during a wider crypto bear market, where investment shifted towards less volatile assets. Currently, stablecoins represent approximately 10% of the total crypto market capitalization, compared to close to half of all crypto investments at one point. Liquidity has shifted towards BTC and ETH in 2023.

BUSD faces ongoing challenges, including the potential enforcement action by the U.S. Securities and Exchange Commission (SEC) against its issuer, Paxos. Following the news of the SEC probe in mid-February, BUSD's supply shrank by 60% in the following weeks. According to BeInCrypto data, BUSD has fallen to 13th place among cryptocurrencies, with a string of altcoins outperforming Binance's dollar-pegged token. Shiba Inu briefly overtook BUSD earlier this week.

Takeaways:

  • Stablecoin transfer volumes have declined 19.2% in the past week, with BUSD leading the fall in volume.

  • Other major stablecoins like USDC and TUSD have also seen their total supply dwindle, with the top four stablecoins experiencing a 23% decline in market capitalization from peak levels.

  • Stablecoins currently represent approximately 10% of the total crypto market capitalization, with liquidity moving towards BTC and ETH in 2023.

  • BUSD faces ongoing challenges, including the potential enforcement action by the SEC against its issuer, Paxos.

Conclusion: The decline in stablecoin transfer volumes and market capitalization highlights the shifting trends in the cryptocurrency market. While stablecoins played a significant role in the previous crypto bear market, liquidity has now moved towards less volatile assets like BTC and ETH. BUSD's ongoing challenges, including the potential SEC enforcement action, have also contributed to its decline in market capitalization and supply.

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