Stack Smartly Weekly Report #53
The winner
Hi there Stackers,
Today I will discuss how the stablecoin landscape has changed during 2023 and which stablecoin is the clear winner.
Let’s go!
Bitcoin Aggregate Risk Model
As of now, the Risk Score equals 2.66
It is calculated based on the Bitcoin price being at $27,809
Risk Score has historically been lower in 30,1% of the time
Metrics Summary
Weekly Market Overview
Best performer: -5% Binance Coin (BNB)
Worst performer: -16% OKB (OKB)
Weekly Developers Overview
Stablecoin landscape
Firstly, I would like to give you a high-level overview of the stablecoin market during 2023.
Here is a chart showing market caps of the 4 biggest stablecoins which together make up 94,6% of the total stablecoins market cap.
We can observe three major shifts that occurred during 2023:
BUSD's market cap has significantly declined
USDC's market cap has significantly declined
USDT's market cap has significantly increased
The decline of BUSD’s market cap
Long story short, the BUSD’s market cap declined due to two events.
Firstly, on 13 February SEC claimed that BUSD is an unregistered security, and they decided to sue Paxos, the issuer of BUSD. On the same day, the New York Department of Financial Services (NYDFS) ordered Paxos to stop minting BUSD and they complied. Paxos published an official announcement stating that from February 21, it will no longer issue new BUSD tokens. As a result, investors started switching to other stablecoins and exchanges started to move away from using BUSD as the main trading pair.
Secondly, on 27 March the CFTC filed a lawsuit against Binance and Changpeng Zhao, Binance's CEO. Consequently, BUSD endured over $500 million in outflows in just 24 hours after a lawsuit was filed and it contributed to a further decline in its market cap.
Since the beginning of 2023, the market cap of BUSD declined by 57%.
The decline of USDC’s market cap
The decline of USDC’s market cap was mainly driven by one event.
On 11 March, Circle, the issuer of USDC, confirmed that it had $3.3 billion in SVB Bank that has recently collapsed. It shrunk the confidence of investors and USDC plummeted to an all-time low of $0.8774
Then a day later, on March 12, the FDIC announced that all Silicon Valley Bank's deposits will be paid in full, which meant that the Circle's $3.3 billion was safe and they were once again fully backed.
Although it appeared that the sentiments changed to positive ones as USDC quickly regained its peg, the whole situation caused irreversible damage to the credibility of USDC, making the market cap of the stablecoin continue the rapid decline.
As of now, it seems like the decline is over but it's worth noting that since the beginning of 2023 the market cap of USDC declined by 27%.
The increase in USDT’s market cap
Now, you already know which stablecoin is the clear winner here.
As a result of bad press around BUSD and USDC, the market cap of USDT has significantly increased.
It’s simply because USDT was treated as a safe-heaven stablecoin by a majority of investors.
Since the beginning of 2023, a market cap of USDT increased by 21%, strengthening its dominant position in the stablecoin market.
Lastly, the meme of the week
Kudos to my buddy for sending me this one.
That’s it for today. If you enjoyed reading the Weekly Report, don’t hesitate to share it with others!
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Cheers,
Mikołaj