After issuing a Wells Notice from the Securities and Exchange Commission (SEC) against the issuer of Binance USD (BUSD) Paxos, the stablecoin has taken a hit in the market. Market capitalization fell rapidly as the company was ordered to stop issuing new tokens and stablecoin redemptions increased. There has been a slowdown in selling but the BNB whale is still getting rid of the problematic stablecoin in high numbers.
BNB Whales Dump Binance Stablecoin
According to data from whale-tracking website WhaleStats, the top 100 BNB whales are still shedding BUSD holdings. In a period of 7 days, these big investors have sold an average of more than 2 million BUSD, making it the largest token sold in a week.
Typically, these whales tend to trade stablecoins such as BUSD back and forth for other digital assets. But this time, no stablecoin is returned to the wallet. However, they have moved to BSC-USD which has bought an average of $101,040 in the past week.
BUSD is number 1 most sold token among whales | Source: WhaleStats
This comes as no surprise as no new BUSD has been put into circulation and thus, investors are starting to pull out of the stablecoin due to declining liquidity. In addition, the use of BUSD smart contracts among these large investors has also declined.
In the last 24 hours, smart contract usage has dried up by more than 83%, although it is still the sixth most used smart contract around. Meanwhile, the average transaction size of Binance USD among whales has dropped significantly to only $8 while the average transaction size for BTC-USD has increased to $42,843.
Despite the huge selloff, BUSD remains the largest token excluding BNB among the top 100 whales. They still have a collective $535.48 million in stablecoins, which works out to about 47.12% of their total holdings.
BUSD market cap down 50% from the beginning of the year | Source: BUSD Market Capitalization on TradingView.com
Market Capitalization BUSD 50%
Amidst all the redemptions and Paxos agreeing to stop issuing new coins, the BUSD market cap has been hit. Stablecoins from 2023 are trending above the $16 billion market cap doing business as usual, but in the month since the SEC decision, the stablecoin market cap has dropped to $8.369 billion.
This drop caused Binance USD to drop to the 10th place in the list of the largest cryptocurrencies by market cap, where before, it was constantly competing for the 6th and 7th place in the list. It is also currently behind Dogecoin whose current market cap is $1 billion higher than BUSD.
However, the stablecoin has managed to maintain parity with the US dollar and continues to trade on a peg. It still sees a significant trading volume above $8 billion, although trading volume dropped by 20% in the last day following the announcement that Binance was moving a fee-free trading pair to TUSD.