Market capitalization for Circle’s USDC decreased by approximately 23% from $43.4 billion on March 10 to $33.3 billion at present. BUSD has decreased by 52% from $16.1 billion on February 13 to $7.67 billion at this time. In the last 30 days, USDT has climbed by $9 billion.
The declining market cap demonstrates how investors are flocking toward its rival Tether [USDT] which reached a 22-month high in market share.
The value of the fifth-largest cryptocurrency in the world fell to an all-time low on March 10 after Circle, the US company that created the coin, revealed that Silicon Valley Bank [SVB] controlled $3.3 billion of the reserves that were used to underpin it.
USDC token net outflows ie, the number of funds leaving the exchanges, surpassed $10 billion when regulators shut down key reserve banking partner SVB.
The stablecoin’s decline persisted even after its issuer, Circle, survived the collapse of SVB and the token regained its dollar price peg.
Among other stablecoins that were affected was Binance’s BUSD token which also plummeted.
The event sent the stablecoin market into chaos as many of these asset classes momentarily lost their price pegs.
It also exposed how fiat-backed stablecoins depend on the stability of legacy financial systems.
After several banking system failures, Circle transferred virtually all of the money to BNY Mellon, one of the biggest custodian banks in the world, while keeping limited funds with other partners, as per an announcement.
The turbulence in the stablecoin market also prompted Binance to temporarily suspend the auto-conversion of USDC to BUSD citing the then market conditions.
Binance Halts USDC
The decision was made in response to heavy inflows and the mounting cost of sustaining the conversion and it was a normal risk-management procedure, a statement released by the platform read.
Later, the world’s largest crypto exchange announced the launch of several new stablecoin trading pairs. Binance in a blog post, said that it would open trading “the BNB/TUSD, BTC/TUSD, ETH/TUSD, TUSD/USDT, USDC/USDT, and USDP/USDT spot trading pairs.”
The trading platform also stated that it has stopped or will stop BUSD auto-conversion for users’ new deposits of USDC, USDP, and TUSD, respectively. Furthermore, users can no longer withdraw USDC, USDP, or TUSD from their BUSD balances.