The current crypto market rebound comes as a welcome trend for traders after a tough time for most part of 2022. However, macroeconomic scenario does not really reflect a bullish sentiment in the traditional markets as yet. The FTX collapse at the far end of 2022 dealt a body blow to the crypto community. Meanwhile, there seems to be a change of attitude that is driving the altcoin rally currently.
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What’s Happening With BUSD?
In the context of market recovery post the FTX related liquidity concerns, on chain data shows some interesting trend in Binance BUSD data. According to Crypto Quant data, there is a drop in BUSD reserves since December 12, 2022. This decline marked the start of pumping of altcoin prices. It may be recalled that a majority of investors moved their assets to Binance exchange when they feared FTX exposure would lead to closure of companies. However, the situation had apparently changed few weeks later, as evident with the decline in reserves.
“$BUSD reserves have risen significantly since the FTX. But it started to drop significantly from December 12. That’s when altcoin began to pump. Market liquidity remained unchanged and began to eat up $ BTC’s dominance.”
This is not particularly a good thing for the crypto market in the medium term. Compared to previous bull runs, the current rebound is not caused by a fresh influx of capital.
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The Binance USD stablecoin lost significant market cap in the last one month. In fact, from around Deceber 14, the BUSD market size curve has been on a steady downward curve. From a high of around $24 billion immediately after FTX meltdown, the stablecoin lost a market share by a whopping 40%.