By Brenda Collins
Many USD-pegged tokens continue to suffer blows as the crypto industry experiences an unstable shift in the stablecoin market. According to reports, Binance stablecoin (BUSD) is dealing with significant market loss as major BUSD whales sell off their assets.
In addition, the massive sell-offs were reportedly further propelled as the network suspended the pumping of new BUSD supply into market circulation, making its liquidity decline. Consequently, investors are agitated as the crisis expands, and many are dumping their BUSD holdings.
Additionally, the market capitalization of BUSD drastically declined shortly after the U.S. Securities and Exchange Commission issued the network a Wells Notice. Furthermore, the quantity of the token in circulation sharply dropped, causing it to experience a massive price correction.
WhaleStats, a firm that tracks whales’ actions, reported that the top 100 BNB whales are disinvesting their BUSD tokens. In the last seven days, about 2 million BUSD tokens have been offloaded, according to the report.
Many market analysts stated that the severe contraction in BUSD’s liquidity caused by new supply failure was a major reason for the massive sell-offs. More so, reports showed an enormous decline in the use of BUSD smart contracts, with a record over 83% plunge in the last 24 hours.
The Cause Of The Stablecoin Market Crisis
According to reports, the troubles around the stablecoin market arose in early March when the crypto-friendly Silicon Valley Bank collapsed. The crisis caused USDC and DAI to depeg from USD as the bank held part of USDC’s reserves. Meanwhile, DAI also has part of its reserves in USDC.
However, the two stablecoins are gradually recovering their peg with the USD. The recovery started after the US regulators announced their plans to protect the investors at Signature Bank and Silicon Valley Bank, which went bankrupt this month.
Amidst the losses caused by the instability of the stablecoin market was the case of an investor who recently lost about $2 million in crypto assets. According to the report, he wanted to swap out an investment that had exposure to USDC and DAI, converting them to USDT. But in the process, he got dipped, and instead of $2 million, he got $0.05.
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