BUSD’s market share on Binance has fallen below 10% for the first time since July 2021. As of May 18, 2023, BUSD’s market share stands at 9.9%, while TUSD’s market share has risen to 24%. This significant change indicates a shift in the stablecoin landscape, as just a few months ago, BUSD’s market share consistently exceeded 20%. In this article, we will explore the possible reasons behind this decline and discuss its implications for investors.
Concerns about the Stability of BUSD
One possible reason for the decline in BUSD’s market share is growing investor concerns about its stability. BUSD is a stablecoin, meaning it is pegged to the US dollar. However, doubts have emerged regarding the stability of BUSD’s reserves. In March 2023, Binance made an announcement to increase the transparency of its BUSD reserves. Despite this effort, investor concerns have not been completely assuaged.
Preference for TUSD over BUSD
Another reason for BUSD’s declining market share could be investors’ preference for TUSD, another stablecoin option. TUSD is backed by Tether, a more established and well-known company compared to Binance. Tether has been operating since 2014 and boasts a significantly larger market capitalization than Binance. This familiarity and trust in Tether’s reputation may have led investors to choose TUSD over BUSD.
Impact of the Declining Cryptocurrency Market
The overall decline of the cryptocurrency market in recent months could also be a contributing factor to BUSD’s diminishing market share. During market downturns, investors often opt to sell their stablecoins to obtain cash, as stablecoins are designed to maintain their value. This shift in preference may have affected BUSD’s market share, causing it to decrease as investors sought liquidity in a bearish market.