According to recently released data, the market valuation of the crypto assets in the sector dropped to its lowest level since September 2021 in February, falling by 0.68% to $136 billion, marking the eleventh continuous monthly loss. On Bitcoin Smart, anybody can trade cryptocurrency like: https://bitcoin-profitapp.com/
The total share of the market of stablecoins in the industry is currently lying at 11.4%, down from about 12.31% in January, according to crypto compare’s most recent Stablecoins & CBDCs Report. Since April 2022, this has been their own lowest market share.
It is being said that the prices of cryptos shrinked the stable coin market.
The New York Directorate of Wealth Management (NYDFS) has ordered Binance USD (BUSD) issuer Paxos to cease issuance. The article indicates that this likely caused the stablecoin’s market valuation to drop 18% to $13.2 billion.
Binance Dollar (BUSD), according to the notification, is an unregulated security.
In the meantime, the market valuation of USDT has grown by $2 billion, according to the analysis from CryptoCompare. The number and a 676% increase in BUSD/USDT transaction volume on February 13 indicate that a significant portion of the BUSD has been exchanged for USDT on the marketplace.
According to the research, the stablecoin for USDT had a market share gain in February between 48.7% to 51.7%, which was the leading position since October 2021.
Stablecoins from Paxos saw multiple withdrawals after the SEC’s action against BUSD. As a result, the price of pax dollar and Binance USD falls by 24% and 15%.
Tether’s USDT and TrueUSD (TUSD), whose market value grew by 3.85% and 2.31% to 70.4 trillion dollars and $968 million, respectively, may have profited from the collapse in the BUSD.
Trade Volumes on the Decentralized Exchange (DEX) Increased by About 250% During the Stablecoin Crisis.
During the stablecoin crisis earlier this week, when the value of USDC, the second-largest cryptocurrency exchange by market valuation, fell to a low of $0.87 before rebounding decentralized exchanges.
This market reached its all-time low in USDC, according to crypto compare’s most recent Market Analysis blog article, and it did so after Circle revealed that $3.3 billion was kept in the long-gone Silicon Valley Bank.
The second-largest failure of a major American bank in history, Silicon Valley Bank (SVB), was shut down by US authorities last week due to a panic-instigated bank run. DAI eventually lost its peg, and USDC now supports a sizable percentage of the stablecoin backed by bitcoin.
Slumping Stablecoin Market Cap
Stablecoins’ market capitalization has substantially declined and is currently less than $140 billion. The sum is $138 billion, according to information from a previous CryptoCompare study. Since September 2021, this figure has remained relatively high.
Moreover, the research revealed that their market share had fallen below 12.5%, indicating that traders had switched from stablecoins to riskier assets. Several separate stablecoin failures made a declining cryptocurrency market worse last year. Popular projects with strong USD pegs, like Tether (USDT) and Circle’s USDC, suddenly lost them.
A Resonating Impact
With the demise of UST, Vader Protocol halted the production of its USDV and spent the remaining months of the year trying in vain to construct a more viable and investment algorithmic cryptocurrency design. However, NeutrinoUSD, with an estimated market valuation of $20.70 million, was out of parity for more than five weeks before it could not regain its peg.
There is a lot of hope that things will improve in 2023. According to a January 27 Bloomberg story, credit rating agency Moody’s is already taking measures to include a scoring system for stablecoins that will analyze up to 20 digital products.
Stablecoins: Will They Prosper in 2023?
Bitcoin and its reserves have been the topic of an abundance of mystery and suspicion for many years. Regular audits and a third-party scoring system might help this asset class become more legitimate.
Stablecoin projects from two prominent Australian banks are currently being announced, and Japan is contemplating incorporating them into its economy.
In addition, several other significant participants in the market, like Apple Pay and Mastercard, have endorsed stablecoins. New users can easily access the area thanks to these integrations.
Conclusion :
Stablecoins enable cost-effective, instantaneous transfers of substantial money to destinations worldwide. Stablecoins can replace the US dollar as the main trade currency as crypto use increases and become a global standard for retail and cross-border corporate transactions.
Yet it can end up being a two-edged sword. Governments will undoubtedly ensure that stablecoins are strictly controlled if they ever achieve this level of utility.