In the year 2021, Binance USD (BUSD) was among the top and most valued stablecoins in the entire stablecoin industry.
The dollar-pegged token is issued by the Binance exchange that completed the ecosystem offered by the Binance blockchain.
After the year 2021, came the year 2022, which was not so promising for stablecoins such as Binance USD and Tether (USDT).
USDT, which is the largest stablecoin, also went through a very difficult and challenging situation in the past year. However, it still managed to maintain its spot as the largest stablecoin in the market by valuation.
Unfortunately, the situation has not been the same for BUSD as the stablecoin has lost a fortune in the year 2022.
When the year 2023 brought in success and pumps for the entire crypto industry, the situation was not the same for BUSD.
In the past 30 days, the valuation of BUSD has continued declining and as of today, it is hovering at a lower figure.
BUSD Lost $2 Billion Worth of Valuation
The latest market data shows that in the past 30 days, the overall valuation for BUSD has experienced a major decline. The valuation of the stablecoin has recorded a $2 billion decline in its valuation in the past 30 days.
The report shows that on Wednesday, the valuation recorded for BUSD was at a low of $15.3 billion. Surprisingly, the valuation of BUSD around the same date in December was at $17.5 billion.
Only BUSD Witnessed the Demise
This is a very alarming situation for BUSD and it has witnessed a major dip compared. The most concerning part is that none of the other major stablecoins in the same category as BUSD have faced such declines.
Therefore, the recent decline puts BUSD under the spotlight as investors and the rest of the crypto market is eager to know what has caused the decline.
Despite the slight declines, the valuations for USD Coin (USDC) and Tether (USDT) have remained at the very top.
As of today, USDT has the highest market valuation of $67.52 billion while USDC has the second-largest valuation that is worth $43.09 billion.
The cause May be Binance Exchange
There is just one explanation that supports the current situation the valuation of BUSD is plummeting.
The explanation is the constantly rising fear among the users and investors due to the Binance exchange.
Although Binance exists as the largest exchange in the entire crypto-verse, it has raised many concerns since November.
The concerns were raised especially after the demise of the FTX exchange, which was the second-largest crypto exchange by trading volume at that time.
As the exchange shut down, other crypto exchanges tried saving their positions in the market. This is when Binance came up with the idea of proof-of-reserves (PoR).
This meant that each crypto firm would release data about the reserves they have in place for every asset on their platform.
The exchange even had the audit carried out by Mazars from South Africa. As the audit report for the PoR was released, many from within the crypto-verse argued the Bitcoin reserves the exchange claimed it had.
This resulted in huge withdrawals being witnessed from the Binance exchange. Many users feared that the Binance exchange might have been using the same tactics as the FTX exchange showing false reserve figures.
As the investors pulled out, they also pulled out from their investments and holdings in the native tokens of the Binance platform. These native tokens included Binance Coin (BNB) and Binance USD (BUSD).
This is the reason why huge declines have been recorded in the trading prices and valuations of these tokens in the past 30 days.
There are still many speculations that the exchange may end up facing the same fate as the FTX exchange. Therefore, the withdrawals have continued and BUSD is facing its full impact.