Stablecoin Tether gains market cap from BUSD

CryptoCompare’s new report highlights the performance of stablecoins in February, in particular the stablecoin BUSD, which suffered an 18% decline in market cap, and Tether (USDT), which benefited from BUSD’s decline by increasing market capitalization by 3.85%

BUSD stablecoin suffers 18% drop in February while Tether (USDT) benefits

CryptoCompare, a leading cryptocurrency data analysis company, has released its latest report highlighting the performance of stablecoins in February.

The report provides valuable insights into the stablecoin market, which has become increasingly important in the cryptocurrency space due to their stable value and reduced volatility compared to other cryptocurrencies.

According to the report, BUSD, the stablecoin issued by Binance, experienced an 18% drop in its market capitalization in February.

This is a significant drop, considering that BUSD had been gaining market share in the market in recent months.

The reason for this drop is not entirely clear; many think it is related to the charges by the SEC against Paxos.

However, it could also be attributed to increased competition in the stablecoin market, with the introduction of several new coins in recent months.

For those unaware of the affair between the SEC and Binance USD: the SEC issued a statement saying it was investigating whether certain stablecoins, including Binance USD (BUSD) and Paxos (PAX), were considered securities under US law.

BUSD was created by Binance, the world’s largest crypto exchange, and PAX was created by Paxos Trust Company, a regulated financial institution.

The SEC’s investigation has raised concerns among cryptocurrency investors and enthusiasts about the potential regulatory risks associated with stablecoins.

On the other hand, Tether (USDT), the world’s largest stablecoin, benefited from BUSD’s decline by increasing its market capitalization by 3.85%.

USDT has long been the dominant stablecoin in the market and continues to maintain its position despite increased competition.

The report points out that USDT’s market dominance can be attributed to its first-mover advantage, established brand and widespread acceptance among exchanges.

Report highlights growing stablecoin market

Stablecoins have become an essential part of the cryptocurrency ecosystem, as they provide stable value that is not subject to the volatility of other cryptocurrencies.

This stability makes stablecoins an attractive option for traders and investors looking for a less risky way to enter the cryptocurrency market.

In addition, stablecoins also offer several other advantages, such as faster settlement times and reduced transaction fees compared to traditional fiat currencies.

The industry has grown rapidly in recent years, and the total market capitalization of stablecoins exceeded $50 billion in February 2021.

This growth has been driven by increased demand from traders and investors, as well as the introduction of several new stablecoins that offer unique features and benefits.

The report by CryptoCompare also analyzed other coins, including USD Coin (USDC), Dai (DAI), and TrueUSD (TUSD).

All of these stablecoins experienced modest growth in their market capitalization in February, with USDC being the fastest growing stablecoin with a 4.79% increase in its market capitalization.

The report also highlighted the growing interest in decentralized stablecoins, such as TerraUSD (UST) and Frax (FRAX), which are designed to be more resilient to market fluctuations and offer greater transparency and decentralization than traditional stablecoins.

Decentralized stablecoins are still a relatively new concept, but they are gaining ground in the cryptocurrency space, and several new decentralized stablecoins have been introduced in recent months.

CryptoCompare’s report provides valuable insights into the performance of stablecoins in February, highlighting the continued growth of the market and the dominance of established stablecoins such as USDT.

The report also highlights the growing interest in decentralized stablecoins, which could potentially disrupt the market for traditional stablecoins in the future. It can be said that stablecoins have become an important part of the cryptocurrency ecosystem, providing stable value that is less prone to volatility than other cryptocurrencies.