In a recent Q2 earnings call, Coinbase CEO Brian Armstrong startled everyone by revealing that Binance, a major cryptocurrency exchange, had sold its entire USDC stash. Many are questioning why Binance would do this and how it will affect the Bitcoin market.
In simple terms, USDC is a digital currency that’s supposed to be equivalent to one US dollar. It’s used for trading and transactions within the cryptocurrency world, providing a more stable option compared to the often volatile prices of other cryptocurrencies like Bitcoin or Ethereum.
Interestingly, this news comes as a bit of a surprise because Binance was also holding a significant amount of USDC, which is owned by a group of companies including Coinbase. However, things get more complicated when we look at the bigger picture.
It is quite noteworthy that, the value of USDC keeps on decreasing in recent months. At the beginning of this year, the total amount of USDC in circulation was worth around $44.5 billion. But now, it’s down to just about $26.06 billion. The partial reason behind this drop was that a government agency stepped in to prevent a crisis involving the company behind USDC.
What is the Catalyst Behind Selling Call?
Moreover, the cryptocurrency space is buzzing with theories about why Binance decided to sell off its USDC. Some experts are suggesting that market pressures and the rise of new competitors might have played a role. For instance, another stablecoin called TUSD and FDUSD has been introduced by Binance recently, which could be related to their decision to unload USDC. While Paolo Ardoino, CTO of Tether (USDT), dropped a hint on Twitter about increasing market pressures and the emergence of new competitors.
On top of this, Chase Coleman, who’s a big player in investment management, has also added to the speculation. He hinted that Binance and its allies might be shifting their strategy, moving away from USDC to other stablecoins that they have more control over.
Binance has high hopes with TUSD?
Looking at the other report by a company called Kaiko Binance had been offering free trading for specific pairs of cryptocurrencies, which attracted more customers. Even though they later stopped this free trading strategy due to costs, Binance managed to increase its share of the market compared to other exchanges.
Right now, Binance seems to be putting its focus on another stablecoin called TUSD. They are promoting it heavily and making it easy for people to trade using TUSD. This shift in principle could be a reason why Binance decided to sell its USDC holdings.
The situation is like a chess game with unclear moves. For now, it seems like the value of USDT, another stablecoin, is slightly off track, but experts are keeping an eye on it to see if there are any major concerns.
