BNB Whales Dump Millions of BUSD Amid Crypto Market Shake Up

Binance USD (BUSD) tokens have been subject to a significant sell-off by major whales on the BNB Chain, as the cryptocurrency market experiences a seismic shift in the stablecoin arena. This sell-off trend is in line with the absence of new BUSD supply being introduced into circulation, resulting in investors fleeing the stablecoin as liquidity dwindles.

The market cap of BUSD took a hit following Paxos’ receipt of a Wells Notice from the U.S. Securities and Exchange Commission (SEC), leading to a sharp drop in the token’s circulating supply as redemptions soared. Regulators have compelled Paxos to halt the issuance of new tokens, while the demand for redemptions of BUSD has soared.

According to data obtained from the whale tracking platform, WhaleStats, the leading 100 BNB whales have continued to divest their BUSD holdings, having offloaded over 2 million BUSD on average over the course of the past seven days.

Given that the liquidity of BUSD has contracted as a result of the absence of new tokens, investors started dropping the stablecoin. Moreover, the employment of the BUSD smart contract by these major investors has seen a decline, with reports indicating that smart contract usage has fallen by over 83% within the past 24 hours.

The stablecoin crisis was exacerbated earlier this month after both USDC and DAI lost their peg to the U.S. dollar over the revelation that the former had part of its reserves at Silicon Valley Bank. DAI is partly backed by USDC, among other digital currencies.

The peg has now nearly been restored after US regulators announced measures to safeguard all depositors at Silicon Valley Bank and Signature Bank after their recent closures.

Regulators in the US have ensured full protection for depositors at Silicon Valley Bank after it was closed last week and placed under the control of the Federal Deposit Insurance Corporation (FDIC).

The crisis has seen a “desperate” cryptocurrency investor pay well over $2 million in an on-chain trade to swap out of an investment offering them exposure to $USDC and the decentralized stablecoin $DAI and into $USDT, but only received $0.05 in return.

Image Credit

Featured Image via Pixabay

Source