Stablecoin Dominance At 9-Month Low After SEC Targets Binance Dollar

Stablecoin dominance has been declining all year, but recent threats by the SEC might have pushed it lower.

The metric, which tracks how much of crypto’s total market value is stablecoins, has dropped 12.37%, its lowest point since May 2022, per Blockworks Research.

Decreasing stablecoin dominance typically suggests a shift in sentiment toward risk-on appetite. Stablecoin dominance was only 4.9% when bitcoin hit all-time highs in Nov. 2021.

That figure rose sharply on the back of the FTX debacle one year later.

Stablecoin dominance peaked in June and November last year (source)

Stablecoin dominance is now one of the only crypto charts with a continued fall over the last 60 days, according to Blockworks Research analyst Matt Fiebach.

“It’s unclear if market capital is looking for risk-on positions in crypto or if it is fleeing what it sees as an area of potential regulatory scrutiny,” Fiebach said.

While sentiment remains uncertain, the threat of regulatory action against stablecoins could be driving capital back into majors BTC and ETH.

Meanwhile, Binance-branded stablecoin BUSD has lost significant market share since it confirmed receipt of an SEC Wells notice, which signifies intent to sue.

crypto assets that are less reg and credit sensitive. This applies to holders that dont have the ability to move to fiat. If perp funding rates go negative, this would support this narrative, as holders looking to keep risk neutral would exit beta via selling BTC or ETH perps.

— Rich Rosenblum (@Rich_GSR) February 16, 2023

GSR president Rich Rosemblum weighed in on positive bitcoin price action in light of BUSD’s troubles.

The SEC reckons BUSD is an unregistered security. Paxos, the issuer of the token, stopped issuances earlier this month.

BUSD has lost significant dominance in the stablecoin market following that development, down from roughly 16% in December to under 10% today.

Source