Is Binance’s BUSD the Reason Behind the Recent Altcoin Pump? Here’s What Happened
The biggest cryptocurrency exchange in the world, Binance, made a significant effort last year to elevate its own stablecoin, BUSD, above that of competitors. However, 2022 wasn’t the best year for stablecoins. The trust that consumers had placed in stablecoins began to erode after Terra UST’s collapse in May.
Data from Crypto Quant showed that starting December 12, 2022, BUSD reserves have decreased. After the FTX fiasco, the majority of investors transferred their funds to the Binance exchange. A few weeks later, the situation appeared to have altered, as the fall in reserves demonstrated.
“$BUSD reserves have risen significantly since the FTX. But it started to drop significantly from December 12. That’s when altcoin began to pump. Market liquidity remained unchanged and began to eat up $ BTC’s dominance.”
Binance has maintained its position and worked to foster more trust and openness among the public. But lately, worries about the exchange’s condition have grown. In the month that followed, BUSD redemptions totaled $5.5 billion.
BUSD continues to rank as the third-largest stablecoin by market cap, according to statistics from Coingecko and its market capitalization decreased by 24.3% over the past 30 days as well.According to Binance, monthly audits of BUSD reserves are conducted in accordance with all applicable laws.
Last month, Binance stated that Binance US will make an effort to purchase the assets of Voyager Digital. However, the SEC of the United States stopped the acquisition. In this case, the SEC declared that it was “officially examining” the debtors. Alameda Research, a former trading division of FTX, has also expressed opposition to Binance US’s acquisition of Voyager’s assets in addition to the SEC.
For the unversed, BUSD is a stablecoin that was developed by Paxos and Binance. In order to offer its stablecoin as a service product to outside enterprises, Paxos makes use of blockchain technology. The New York State Department of Financial Services has rules that apply to BUSD.