Market Cap Meltdown
Binance USD (BUSD) has recently taken a splat on the crypto floor, with its market capitalisation falling below the $10 billion mark for the first time in almost two years. Once riding high with a peak market cap of $23.49 billion on November 15, right after the infamous FTX collapse, it now sits in a rather precarious position at $9.66 billion as of March 3, 2023. Talk about a rollercoaster ride!
Regulatory Rumble and Rumblings
The fall from grace can largely be attributed to a rigorous regulatory crackdown by U.S. authorities on Paxos, the issuer of BUSD. The anticipated storm began on February 12, which saw frantic whispers of a potential lawsuit from the U.S. Securities and Exchange Commission (SEC) regarding investor protection laws. Since that fateful day, BUSD has lost a staggering $6.65 billion in market cap. It’s not the kind of diet anyone wants their financial investment to undergo!
Delisting Drama
Adding salt to the wound, Coinbase recently announced that it would be kicking BUSD to the curb on March 13 due to its failure to meet certain listing standards. Apparently, it’s like a party where the guest of honor doesn’t even make the dress code, and they end up being uninvited. With their delisting, one can’t help but wonder what other exchanges might soon follow suit!
A Broader Crypto Conundrum
It’s not just BUSD feeling the pinch; the entire crypto market has been experiencing turbulent times with falling valuations. In fact, the recent drama surrounding Silvergate Bank and its late annual 10-K filing on March 1 has further fuelled the concern across the cryptocurrency waters, sending ripples of uncertainty through the community.
The Competitive Landscape
Once a hotshot immediately behind Tether (USDT) and USD Coin (USDC), BUSD has tumbled to a shy tenth place amongst cryptocurrencies. The next candidate in line is Solana (SOL) with a market cap of $7.98 billion. While BUSD was all the rage just a few months ago, these new kids on the block are making sure it doesn’t steal the headlines anymore.
Lessons from the CEO
Even Binance’s own CEO, Changpeng ‘CZ’ Zhao, threw shade on BUSD, revealing in a Twitter Spaces event on February 14 that he didn’t ever consider it to have great potential. Talk about pessimism! He candidly mentioned that he thought it “may fail” even during its launch. And it seems his premonition wasn’t far off as BUSD’s fortunes have taken a nosedive while USDT has hopped over the wall to collect some of those stray billions.
Binance Strikes Back
To hedge against the dip in demand for BUSD, Binance appears to be changing lanes—minting approximately $50 million worth of TrueUSD (TUSD) to diversify its stablecoin holdings. It’s like a captain changing ships after his boat has sprung some serious leaks!
