Binance USD Supply Increases Amid Heated Stablecoin Wars

The aim behind stablecoins development was to provide stability over the highly volatile nature of crypto assets. This means that stablecoins hedge your funds against the impact of macroeconomic factors like inflation. Currently, stablecoins represent about 15% of the total crypto market cap of over $933 billion. Several prominent firms have created their stablecoins. Usually, the coins are pegged on a ratio of 1:1 to major global fiat currencies like USD, EUR, or GBP. The Binance USD (BUSD) is a notable stablecoin from the leading crypto exchange, Binance. It is the world’s third-largest stablecoin by market cap after Tether (USDT) and USD Coin (USDC).

Binance Committed To Pump Supply Of BUSD

In a recent development, Binance has devised a means to increase the supply of its stablecoin, BUSD. The firm engaged in the sales of its USDC reserves and converted them into BUSD. As a result, Frank Chaparro from the Block noted the spike in the supply of BUSD. From his observation, the stablecoin’s supply, for the first time, crossed $20 billion. CoinGecko indicated that the supply had hit an all-time high of $21.7 billion. This figure represents about 15% of the cumulative stablecoin market cap of $147 billion. Also, Chaparro that BUSD has 22% as its denominated percentage of trades for this October. Binance in September shows that the firm is committed to boosting BUSD supply. It disclosed the conversion plan for the existing balances and new deposits of TUSD, USDC, and USDP into BUSD.

Stablecoins Enter Another War Round

Following Binance’s conversion of USDC to BUSD, the CEO of FTX, Sam Bankman-Fried (SBF), has reacted with comments about stablecoins. According to the crypto billionaire, this new move has indicated signals of the ‘Second Great Stablecoin War.’ SBF noted that the first war round was in 2018, in which both USDT and USDC corner out TUSD, USDP, and GUSD. The FTX chief stated the difference during this period is linked to interest rates that brew more profits for stablecoins. He noted that obser ving the possible outcome for some stablecoins without any fiat backing could be interesting. These included the likes of post-DAI-holding-USDC and post-LUNA. Further, the crypto billionaire cited that sustaining the present waves has to be an interest-bearing mode of which a contrary turn will bring crises. The Tether USDT maintains its position as the largest stablecoin by market cap. However, there’s a recent drop in its share due to regulatory issues, which diverted investors’ interest to its rival, USDC.

General Crypto Market Outlook

The recent price turns in the crypto market were a little below the expectations of many participants. Though the market got a slight overall surge of about 1.71% since the past day, the movement seemed low-tuned. The Asian trading session got Bitcoin surging by almost $1.3%. This pushed Bitcoin price above $20,000, but it dropped slightly after some hours. Ethereum reclaimed to cross over the $1,500 level.

Featured Image From Pixabay, Charts From Tradingview