BUSD Supply Drops 23.8%: What’s Behind the Market Speculation?

• BUSD, the stablecoin founded by Paxos and Binance, has experienced a significant reduction in its circulating supply over the past 30 days, losing 23.8% and dropping its market cap to around $16.77 billion.
• This reduction in stablecoin supply comes as speculation is high surrounding the world’s largest cryptocurrency exchange, Binance, and the U.S. Securities and Exchange Commission (SEC) intervened in a potential purchase.
• BUSD/TRY data via Binance and coinmarketcap.com shows that of the roughly $5 billion in BUSD redemptions, 3.24 billion was lost in three days from December 13-16, 2022.

The stablecoin BUSD has seen a significant drop in its supply over the past 30 days, shedding roughly 23.8% from Dec. 5, 2022, to Jan. 6, 2023. Since Dec. 13, 2022, BUSD’s supply has been reduced by more than $5 billion, going from $21.84 billion to its current level of $16.77 billion. BUSD, the stablecoin founded by Paxos and Binance, has experienced a significant reduction in its circulating supply over the past month. Data shows that among the top ten stablecoins by market capitalization, BUSD has lost the most between Dec. 5, 2022, and Jan. 6, 2023. Tether managed to increase by 1.1% over the past month, and USDC jumped by 1.8% in the last 30 days.

The reduction in stablecoin supply coincides with a time of significant speculation surrounding the world’s largest cryptocurrency exchange, Binance. Last month, Binance announced that Binance US would attempt to acquire Voyager Digital’s assets, but the U.S. Securities and Exchange Commission (SEC) intervened in the purchase. The SEC stated that it was “formally investigating” the debtors in the matter. In addition to the SEC, Alameda Research, a defunct trading unit of FTX, has also objected to Binance US’ purchase of Voyager’s assets.

BUSD/TRY data via Binance and coinmarketcap.com on Jan. 6, 2023 reveals that of the more than $5 billion in BUSD redemptions, the token’s supply shrunk by 3.24 billion in three days from December 13-16, 2022. Despite the significant drop in BUSD’s supply, the relationship between the stablecoin and the Turkish lira seems to have continued.

Overall, the combination of the SEC investigation, Binance US’ attempt to purchase Voyager’s assets, and the significant drop in BUSD’s supply have created a flurry of speculation in the stablecoin market. While the market awaits further news from Binance and the SEC, the relationship between BUSD and the Turkish lira appears to be continuing despite the significant reduction in the stablecoin’s supply.

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