Confusion by Binance USD reorganizes the stablecoin market | coindesk JAPAN | Coindesk Japan

Binance USD (BUSD)’s uncertain outlook has roiled the dollar-backed stablecoin market, with one analyst saying it could accelerate a dramatic turnover of winners and losers.

Cryptocurrency exchange Binance has had a major impact on its decision in September to prioritize BUSD as a trading pair after regulators ordered BUSD issuers to stop issuing new issuances this week. risked receiving

Meanwhile, the two big names in the stablecoin market, USD Coin (USDC) and Tether (USDT), saw an opportunity. Kaiko researcher Conor Ryder believes that USDT could be a short-term winner as market makers, and perhaps Binance itself, will take advantage of USDT, which is more popular with traders than BUSD. Said expensive.

While USD coins have been used sparingly on centralized exchanges (CEXs) and actively on decentralized exchanges (DEXs) these days, the turmoil has created new opportunities, he said.

Flow from CEX to DEX

There appears to be some turmoil as traders move stablecoins off centralized exchanges. According to Nansen, transfers from exchanges such as USDC and USDT on the Ethereum blockchain have outpaced deposits (net outflows) for the ninth straight day. It is said that the withdrawal trend has become active since the FTX bankruptcy in early November last year.

“Exchanges’ concerns from last year about stablecoin holders moving away from CEX are likely,” Ryder said. He added that market makers have also reduced the liquidity of stablecoins since the beginning of 2023.

A look at the individual exchanges gives a good picture of the situation. Last week, Coinbase’s stablecoin holdings fell by 53% to $411 million. $173 million on Bitfinex, down 57%.

Binance lost the most. $1.5 billion down in the last seven days. However, the fact that this amount is only down 8% also shows the size of Binance.

Some of these stablecoins end up in decentralized exchanges (DEXs), said Sheraz Ahmed, managing director of STORM Partners. “This trend is not limited to stablecoins, there is a whole movement from CEX to DEX,” he continued.

Binance has been actively promoting Binance USD over the past few months. But over the past week, over $2 billion of Binance USD has been withdrawn and burned (permanently out of circulation). Issuer Paxos alone has burned $700 million of Binance USD.

｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
｜Image: Shutterstock
｜Original: BUSD Drama Sets Stage for Stablecoin Market Reshuffling